The House | Fixing social care could also be a chance to finally reform council tax

Andy Burnham has pledged to reform social care (Alamy)

3 min read14 min

This is a bold pledge – such reform is likely to be complex, politically contentious, and most of all, expensive. Election campaigns have turned and political careers foundered on similar promises. It is nonetheless encouraging because it presents a chance for genuinely transformative policymaking to restore Britain’s social contract, as I argue in my report for the Social Market Foundation today.

There are a number of potential models for a nationally funded social care system – it could be funded through national taxation like the NHS, or from a dedicated levy; a mandatory social insurance system, like in Japan and Germany; or a system similar to Theresa May’s could draw more heavily on housing wealth. All these would entail raising significant revenue when the tax burden is high and the cost of living is rising, but there are advantages as well. 

Any new system must be nationally funded. Currently, old age social care provision is a duty of local authorities, and a major contributor to the parlous state of local government finances. Councils in England spent around £9.2bn from their own budgets on old age social care in 2024-25; that’s 22 per cent of all council tax receipts. These rising statutory costs have forced councils to cut non-essential services to the bone, leaving them less able to respond to local priorities and undermining local democracy.

The burden is not distributed equally or fairly. Nine of the 10 councils spending the smallest proportion of their council tax on old age social care are in London, with the highest-spending authorities concentrated in lower-income parts of the North and Midlands. Though it sounds counterintuitive, a purely national funding system for old age social care would help Burnham deliver on his pledge to put power and resources back in the hands of local communities. Councils would be free to spend the cash they raise on local services, and local councils, rather than central government, could determine spending priorities.

This could allow the PM to finally sort out England’s outdated, inefficient and unfair council tax system. Based on home valuations from 1991, the system has fallen dangerously out of sync with the distribution of wealth. Absurdly, Buckingham Palace incurs a lower council tax bill than a typical three-bedroom semi in Hartlepool. Council tax is deeply unpopular – one study ranked it last among 23 possible tax-raising measures.

The main barrier to council tax reform has been the fear that revaluation will generate a backlash from those required to pay more, particularly in London. Even if most bills were lower, the geographical concentration of “losers” would make for a serious political problem for any government, let alone a Labour administration holding 59 London seats. If, however, old age social care was funded nationally, council tax reform need not be revenue neutral. A reformed local tax system needing to raise £9.2bn less could be more rational and progressive without large swathes of the country paying significantly higher bills.

Our new report examines this possibility, finding that multiple models of council tax reform become more politically feasible in this scenario. Under the most politically feasible model, this social care saving at lower bands could cut the share of households facing higher bills from 35 per cent to just 4 per cent. In London, the number falls from 2.24m to around 670,000.

Rather than undertaking one difficult and politically dangerous reform, Burnham might be better off attempting two simultaneously.

Barney Dowling is a researcher at the Social Market Foundation