Elderly face £12,000 levy to pay for future care
The elderly could be asked to pay an ‘inheritance levy’ of up to £12,000 to help fund a revolution in old age care. Proposals will be unveiled within weeks in an attempt to end the scandal of an estimated 60,000-plus pensioners a year being forced to sell properties to pay for care home places.
Senior ministers favour the idea of a one-off fee that would either be paid on retirement or deducted from the estates of the elderly when they die.
Critics will seize on the proposal as another Labour stealth tax. But
Downing Street believes most people would rather take part in the optional scheme than face the prospect of having to sell their homes.
Under the current system, anyone with savings above £22,250 pays for long-term care. Nursing home bills for the poorest are met by the taxpayer.
But a green paper to be published at the end of this month will set out a range of options for reform, Whitehall sources say.
One possibility is a social insurance scheme, which would see all workers pay a National Insurance top-up throughout their lives.
However, it would take many years to build up a sufficient fund to meet the cost of care and in the meantime the Government would have to stump up the cash.
Another option is a ‘care duty’ which would see an extra 2.5 per cent taken in inheritance tax from estates worth £25,000 or more.
The cash would go into a Governmentsubsidised care fund. However, ministers are thought to favour the ‘inheritance levy’ idea as an eye-catching proposal for next year’s General Election.
It is thought that in exchange for a £12,000 payment – either made at the point of retirement or deducted from an estate upon death – free care would be offered.
It is not clear how many years of care people would be entitled to.
Stephen Burke, chief executive of the charity Counsel and Care, said: ‘Families want the right care and the right deal. It would be much fairer if better care was funded through a care duty on people’s estates, with a small percentage paying for care.
‘Rather than losing the family home, people would pay a bit more through inheritance tax.
‘The care duty could top up current public spending or be ringfenced and used as part of a new
social insurance scheme to pay for care.’ Around half the £6billion annual cost of care for the elderly is taken from the pockets of the middle classes who own their own homes or who have savings.
The Daily Mail’s Dignity for the Elderly campaign has exposed mounting anger over how elderly people who have saved all their lives are hit hard.
Around one in five people will need long-term care and experts warn social care is heading towards a £6billion funding gap within 20 years.
The green paper is expected to say that everyone will be entitled to a full assessment of their care needs and advice on how much they should pay.
Minimum standards for care homes will also be put on to a proper legal footing.
The Government said it wanted
to forge a ‘new funding settlement between the state, the family and the individual’.
Former health secretary Patricia Hewitt said: ‘I have always thought that people would be willing to trade a certain amount of inheritance tax for the reassurance of knowing that their elderly parent was going to be looked after free of charge.’
Tory care spokesman Stephen O’Brien said: ‘Twelve years after Tony Blair said no one should have to sell their homes to pay for care, Labour is still dithering and has done nothing to stop it.
‘This would effectively be an insurance scheme and it’s certainly going to be worth examining.
‘Good quality, long-term care is inevitably expensive and is always going to be subject to some form of co-payment.’