Scotland, Sweden, and paying for care in an ageing society

Like Sweden, social care in Scotland can be provided in residential care homes, nursing homes, or in the community through home care services.

Also like Sweden, the providers in Scotland can be a mix of public, private, or charitable organisations with service users subject to needs assessments.

READ MORE: 

• Inside the NHS: The beds crisis behind an unravelling NHS 
• What is the future of the NHS under the next UK Government? 
• South Lanarkshire defends 130 per cent fees hike for self-funding care home residents

But then we came to the thorniest issue, and one on which our two nations sharply diverge: the idea that elderly people might have to sell their house to pay for their care home costs.

"That would be very strange to people in Sweden - it just wouldn't happen," she said.

In Sweden, like Scotland, 20% of the population are over 65, but the cost of long-term care for the elderly - whether at home, or in care homes - is almost entirely publicly-funded.

More than 90% of the cost is financed through a combination of local municipal taxes and central government grants.

Service users cover the remainder - around 6-8% - although this "co-pay" is capped and depends on income.

By contrast, in the UK, less than 60% of the cost of long-term care comes from the public purse.

Sweden went from being one of the poorest countries in Europe in the mid-1800s to the fourth richest in the world by 1970, with the growth in its economy accompanied by considerable investment into its health and care systems.

By the 1980s, it was among the highest ranking countries globally when it came to the amount of money it allocated to health and medical care (nearly 8% of GDP compared to 5% in the UK).

By 2010 it was also spending 3.6% of its GDP on long-term care - the second highest in the OECD after the Netherlands (the UK spend was around 2%) - and had the highest ratio of care workers to over-65s in the bloc.

Per capita, by 2018, Sweden was spending around $1600 a year on long-term care compared to roughly $800 in the UK.

Expenditure on long-term care in Sweden is much higher than the OECD average, and significantly higher compared to the UK (Image: OECD)

The current landscape for elderly social care in Sweden dates back to reforms introduced in 1992 which were designed to put residential care homes and home care services on a more even footing.

For the first time, local municipalities - already responsible for social care - were made liable for the costs of elderly people who were in hospital but no longer requiring medical care (a major incentive to tackle delayed discharge), but were also allowed to contract private companies to deliver care services.

Financial incentives were also used to spur quality improvement.

For example, annual grants from the central government to municipalities were tied to achieving specific targets, such as reducing avoidable hospitalisation of old people for chronic conditions.

None of this is to say that Sweden is perfect, or that it offers a blueprint that the UK can easily copy: Swedes are on average around 20% wealthier than Brits, but Sweden also pays much more in taxes (its total tax revenue as a share of GDP was 43% in 2021 - among the highest in the world - compared to 33.5% in the UK, trailing the 39% average for western Europe).

But it does illustrate that things could have turned out differently, had different choices been made.

In short: you get what you pay for.

Since the 1970s, Scandinavian nations such as Sweden have had a much higher tax burden compared to the UK (Image: Institute for Fiscal Studies)

Andrew Dilnot, the economist tasked with coming up with a plan for social care reform in England in 2011, famously compared the UK's approach to its ageing population as “standing in a road with a lorry driving towards you and hoping you die before the lorry hits you”.

The same denialism applies to individuals too: we all know old age is coming - we just hope we die before we have to pay for it.

In Scotland, anyone with capital (property, savings, investments) over £35,000 must pay their own care home fees in full, or partially if they have more than £21,500.

Few things seem to generate more ire among voters than seeing an elderly parent forced to sell their home or burn through their life savings to pay for care home charges, but successive governments have failed to come up with an alternative.

In 2010, the then-Labour government proposed raising money for social care through a compulsory levy on inheritance which would have banked £20,000 from each eligible estate for the Treasury.

It was dubbed the "death tax" and swiftly terminated, along with Gordon Brown's premiership.

Prime Minister Theresa May also fell foul of the social care conundrum in 2017 when her "dementia tax" - the suggestion that elderly people with assets in excess of £100,000 should pay for the care provided in their own home - was greeted by voters like a bag of cold sick.

Theresa May's 'dementia tax' in 2017 was seen as a vote loser (Image: Getty)

Boris Johnson's "health and social-care levy", a hypothecated tax which promised to raise extra funds for the NHS and social care through an extra 1.25% in National Insurance contributions, was voted through by MPs in 2021 only to for them to vote to scrap it in 2022 to "urgently alleviate the tax burden" amid the cost-of-living crisis.

The Labour party - looking set to form the next UK Government - refers vaguely in its manifesto to "[building] consensus for the longer-term reform", while Scottish Labour has gone from promising during its March 2022 party conference in Glasgow to make residential care free of charge for all over-65s to a less expensive desire that "non-residential care charges [are] abolished without further delay".

Yes social care is devolved, but it is difficult to envision any serious overhaul without UK-level funding reform.

As for independence: it would hand us the fiscal levers to go our own way, but not necessarily the finances to bankroll it.

Meanwhile, cash-strapped Health and Social Care Partnerships are closing care homes, cutting home care services, and hiking fees for their wealthier care home residents.

Perhaps there's still time to get out the way of that oncoming lorry. But would anyone even vote for it if there was?