Andy Burnham's Labour government is considering a radical social care levy that would require workers over the age of 34 to pay a mandatory percentage of their salary into a privately managed fund, with new analysis suggesting those earning the average UK salary of £39,000 could face monthly contributions of around £100.
The proposed levy explained
The proposal, first floated by the think tank Re:State in an April report, would impose a starting contribution rate of 1.8 per cent on all workers above 34. However, the plan includes "mandatory contribution rates that rise quickly with age," reaching 3.8 per cent for workers in their mid-40s.
For a worker in that upper rate band earning the current average UK salary of £39,000, the analysis calculates contributions of approximately £1,200 a year, or £100 per month. The funds would be held in privately managed accounts designed to cover the cost of care in old age.
Burnham's stance on funding social care
Speaking as Prime Minister, Burnham described the failure of successive governments to address the social care crisis as a "major dereliction of public duty." He acknowledged that difficult decisions on funding lie ahead, but insisted he was determined to "get it right."
Addressing reporters after outlining the challenges, Burnham stressed the need to exhaust existing resources before raising taxes. "I think we owe it to the public before we talk about tax rises... you first have to look the public in the eye and say 'Are we doing everything we can do from within what we've got?'" he said.
Political backlash from the opposition
The plan has drawn sharp criticism from the Conservative Party, with shadow minister for policy development Neil O'Brien expressing alarm at the proposed rates. He warned that even the lower 1.8 per cent levy represents an immediate default to tax increases.
"The thing that is most alarming is immediately resorting to tax increases. That it is a pattern of behaviour [by Labour], not a one-off. Every time we notice the pressures of an ageing society [Labour] reach for yet another tax increase," O'Brien said.
Expert viewpoint from Re:State
Dr Simon Kaye, director of research at Re:State, defended the structure of the proposal while acknowledging the political sensitivity around age-based rates. He noted that alternative approaches exist, though he cautioned against them.
"If a government wanted to speed up the transition, they could ask older workers to pay a higher rate – we are clear that we don't think that would be the right answer, and there is no suggestion this government will do so, but that is a political choice," Kaye said.
What could this mean for workers?
The levy is one of several options being explored as the government seeks to fund long-term social care reforms. With an ageing population and rising demand for care services, the financial pressure on the state has intensified, prompting policymakers to consider mandatory personal contributions.
If implemented, the system would require workers to start paying in from age 34, with contributions increasing as they approach retirement. The exact thresholds and brackets remain under discussion, and no final decision has yet been announced.
Burnham's emphasis on scrutinising existing budgets suggests the government may attempt to redirect funds before introducing new taxes. However, opposition critics argue that the levy, even at its initial rate, would place an additional burden on working-age households already struggling with the cost of living.
The bigger picture
The social care levy would mark a significant shift in how care is funded in the UK, moving from a tax-funded model towards a system of individual, mandated savings. Similar schemes exist in other countries, but introducing one in Britain would be a major structural change.
For now, the proposal remains at the analysis stage, with Burnham's team reportedly considering how to balance fairness and sustainability. The government has not yet published a formal response to the Re:State report, and any legislation would require parliamentary approval.
As the debate unfolds, both critics and proponents agree on one thing: the status quo is no longer viable. The challenge lies in finding a solution that commands public support in the face of inevitable trade-offs.
