The cash-strapped care system should adopt the model of the state pension to help deal with its multi-billion pound funding hole, Damian Green MP argues.

A new study from the Centre for Policy Studies characterises the current care system as ‘unsustainable’ and warns it discourages local councils from investing in social care and housing for older people.

The number of over-75s is set to double from the current level of 5.3 million in the next 40 years, which means the pressure on the care system is set to increase. The immediate care funding gap is an estimated £2.75bn.

The CPS paper, written by Damian Green MP, who as first secretary of state commissioned the Government’s social care green paper, advises that the care system should adopt the model of the state pension to become sustainable.

The Government could provide enough support for a decent standard of care with a new Universal Care Entitlement, Mr Green argues, while encouraging people to top up this provision from their savings or housing wealth via a Care Supplement.

Fixing the care crisis also proposes taxing the winter fuel allowance, diverting savings from the Spending Review, and potentially imposing a 1% National Insurance surcharge on those over 50.

The crisis in our social care system is ‘one of the most pressing issues our country currently faces’, Mr Green said.

‘By combining this new system with an increase in funding we will be able to tackle this most intractable of political dilemmas fairly and responsibly,’ he added.

Robert Colvile, director of the Centre for Policy Studies, said: ‘Social care has been an intractable issue because it is so hard to come up with a system that is fair to everyone. But Damian’s proposals would pass all the key tests.

‘The system would be sustainable, there would be protection against the “dementia lottery”, no one would have to sell their own homes, everyone would have access a decent level of essential care, and those who paid in more would get access to extras such as bigger rooms or more frequent excursions.

‘This issue has been politically toxic, but we need a solution that commands consensus. I urge politicians from all parties to consider these proposals extremely carefully.’