Spectre of ‘death tax’ haunts Andy Burnham’s care revolution

Labour stood accused of hiding plans for a “death tax” to fund universal social care for elderly people in the small print of a long-awaited white paper published today.

As the government hailed the launch of a national care service as one of the greatest welfare reforms since the creation of the NHS in 1948, the Tories said that Labour was hoping voters would fail to notice the compulsory contribution.

Andrew Lansley, the shadow health secretary, said: “The death tax is alive and kicking – despite their attempts to bury it in the small print of policy in the hope people won’t notice. The simple fact remains that if Labour win the election, they’d introduce plans for a death tax to pay for care.”

Lansley’s attack shows the collapse in trust between Labour and the Tories after cross-party talks, designed to find a consensus on the vexed issue of social care, collapsed recently over funding.

Lansley insisted that contributions should be voluntary while Andy Burnham, the health secretary, wanted to keep open the option of a compulsory contribution.

Burnham moved today to defuse the funding issue ahead of the election, by announcing that recommendations on funding, to be made by a commission, would not be implemented until the parliament after next. But the white paper makes clear that the commission will decide how – and not if – compulsory contributions will be made.

The executive summary of the white paper opts for the comprehensive funding option in which “people get their care free when they need it in return for a compulsory contribution”. It adds: “We think it is right that society takes collective responsibility for sharing care costs, in a way that will give people peace of mind and will allow them to plan properly for later life. For this to be affordable requires a care system in which everyone contributes, through a fair care contribution.”

The funding commission will make recommendations on the “fairest and most sustainable way” for people to contribute in the parliament after next. The commission will be established as part of a series of steps to establish a social care service. These are:

• Improving the provision of residential and home care. This is being achieved, the government said, through the personal care at home bill, currently in the House of Lords, which will provide free personal care to people with the highest needs in their homes from 2011.

• Introducing a national care service bill in the next parliament to put in place the “building blocks” of a system of care, notably establishing clear national standards.

• From 2014, extending care entitlements so that anyone staying in residential care for more than two years will receive free care after the second year.

• Establishing a commission at the start of the next parliament to agree on how compulsory contributions will be levied. These will be introduced in the parliament after next, allowing a national care service to be established after 2015.

Burnham denied that he was kicking the issue of social care into the long grass. “Rome wasn’t built in a day,” he said, adding that the Tories’ “death tax” posters showed the need for a longer debate.

Labour hit back at the Tories’ plan to ask people at the age of 65 to make an £8,000 voluntary contribution to pay for residential care should they need it. Labour sources pointed out that Stephen O’Brien, the shadow health minister, said this would not raise much, telling the King’s Fund on 10 March that it would be “a brick in the wall, not more than that”.

Tory sources said O’Brien was making clear that the Tory funding proposal was one piece in a jigsaw because most people are cared for in their own homes.

O’Brien added that the high costs of care at home could act as a barrier. “To do it for domiciliary care, even if you were doing it for the most critical levels of need, you’re looking at much greater entry prices, which could be a bar to making the thing happen, so we’re looking at that very carefully,” he said. Tory sources said O’Brien was being straight with people and making clear that the Tories were working hard to resolve a difficult issue.

One senior Labour source said the Tory plan would help only 10% of people cared for in residential homes, which in turn only accounts for a quarter of all those receiving care. The rest are cared for in their own homes. The Tory plans would help 150,000 people compared with Labour’s plan to help 2m people, according to the Labour source.
Funding Labour’s three-stage strategy

The social care white paper outlines three stages towards achieving a collectively funded National Care Service by 2016:

• The first stage promises free care at home for 280,000 people with the highest level of needs as well as “reablement” services for 130,000 people to help them continue living independently, at a cost of £670m a year.

• The second stage, planned for the next parliament, will offer free care to all residents of care homes after two years, irrespective of means. This would benefit between 50,000 and 65,000 people at an annual cost of £800m. A national criteria will be established in law to assess people’s eligibility for social care. It is envisaged that this will remove the “postcode lottery” of care which sees care provision vary from council to council.

• The final stage will see the introduction of a comprehensive National Care Service free at the point of need for all adults who require care, funded by compulsory contributions. A care commission will be set up in July (should Labour still be in government) to try to get cross-party consensus and to make recommendations on how to fund the reforms, which it is estimated will cost £4.4bn a year. The reforms would be put before voters at a general election before they are introduced.