Andy Burnham revives spectre of ‘death tax’ to pay for care

Everyone will face a new compulsory charge to pay for elderly care under plans outlined by Labour to revive the so-called “death tax”.

The shadow health secretary, Andy Burnham, said he would consider options for reforming long-term care for frail and disabled adults.

He indicated he was prepared to re-examine his controversial plan for a 10 per cent levy on the value of estates after death, which was drawn up under the Labour government before the last election.

The charge, which would be paid by all, regardless of whether they needed services, would bring social care into line with the NHS and make nursing homes free at the point of use.

Currently, bills for care homes are unlimited and must be paid by individuals from their own resources, unless they are among the very poorest in society.

An estimated 40,000 people are forced to sell their homes each year to pay for care.

Mr Burnham said those with Alzheimer’s and other age-related illnesses must pay a “dementia tax” for care that healthier pensioners avoid.

The Labour spokesman, who was health secretary under Gordon Brown, made the comments as he launched a review of the party’s health policies.

The NHS and social care systems should be brought together to create single “whole person” system of care, he suggested.

Under the government’s plans, which are expected to be detailed in the coming weeks, the lifetime cost of elderly and disabled care will be capped with the state stepping in to pay bills that rise above the limit.

This will protect the public from “catastrophic” costs that can rise to hundreds of thousands of pounds, ministers say.

However, Mr Burnham said that a cap of more than £50,000 on lifetime care fees would be difficult to support.

The coalition’s plan to set the cap as high as £75,000 was “not a fair solution”, he said, while any limit would still leave a two-tier system in which some people pay for their care while others do not.

“It is right to ask whether we can move to an all-in system, extend the NHS principle to all care,” Mr Burnham told the King’s Fund think-tank in London.

With a comprehensive system providing free social care to all, the public would have to pay “differently”, he said.

“But it would only work on the all-in principle,” Mr Burnham said. “All people would be required to contribute, rather than just those needing care. People’s exposure to care costs in an all-in system would be significantly lower.

“But, as with any insurance system, people might pay and never end up using the service.”

Cross party talks on solving the social care funding crisis broke down before the last election after Andrew Lansley, then Conservative health spokesman, attacked Labour’s proposal for the 10 per cent levy, which he described as a “death tax”.

Asked whether he would consider reviving his 2010 plan for a 10 per cent levy on estates, Mr Burnham said: “That is what we have created with the way the consultation is framed – we want people to come forward (with ideas).

“I am not today saying, here’s one I made earlier. We want people to tell us what they think is doable. An all-in proposal could be done in a number of ways and we want to test people’s readiness to think about those things.”

Another option that Mr Burnham was said to have ruled out before the 2010 election was for a flat rate charge of £20,000 on estates.