The Prime Minister says there is no such thing as ‘Mayism’, only ‘good, solid Conservatism’. Fine. But let’s examine just how ‘good’ and ‘Conservative’ her party’s new policy on social care is, unveiled earlier today.
The Tory manifesto says, in effect, that people who need care in old age will have to pay for every penny of it – no matter how big the costs – if they have more than £100,000 in assets, which will be protected. Payment can be deferred until after death, but there’s no escaping it. If you have a home worth, say, £216,000 (the national average), own it outright, and need to be looked after for a long time, you may have to cough up £116,000.
Will Heaven and Fraser Nelson debate the 'dementia tax':
Currently, it’s true, anyone with assets of over £23,250 has to pay for the full cost of their care (family homes are included in totalling assets for those in residential care). But the government, at least until today, was going to introduce a cap of £72,000 in 2020 – based on Sir Andrew Dilnot’s proposals made in the coalition years. Now people risk having to pay far more than that.
Let’s imagine two 80-year-old widows who live next-door to each other somewhere in the south of England. Their properties are both worth £312,000 and they have another £10,000 in other assets, so a total of £322,000 each. Happily, they both live till 95. Unhappily, one of them suffers dementia for 10 years, and soon needs round-the-clock care. The other widow is healthy and reasonably active until the very end of her life.
Under the new Conservative plans, the one who is healthy until the end of her life will leave her estate completely intact to her loved ones. The one who needs all that care, however, will be billed up to £222,000. Over 10 years, at current costs for care, that’s very plausible: the BBC estimates that nursing care costs £1,000 a week; home care £16.70 an hour; ordinary residential care £700 a week.
Having such assets is not as rare as you might think. According to the English Housing Survey, 78pc of over-65s are owner-occupiers. A large proportion of those will have paid off 25-year mortgages.
So is the May proposal remotely fair? It doesn’t seem so to me. This is effectively a massive inheritance tax – but only on those who are ill in old age and need to be looked after. People are calling it a ‘dementia tax’ on Twitter, which I suspect will catch on. As Rachel Sylvester points out, ‘It's a condition lottery – if you have cancer you are treated free on NHS, if Alzheimer's you pay for all care.’
Or as Chris Giles of the FT says:
They propose to build a system maintaining the current huge incentives to divest wealth before any need to access social care. Families are best off if they give away wealth to their offspring early, if they spend the money on cruises, or even on a lifestyle that is more likely to result in a rapid death.
Whatever happened to the Conservative belief that inheritance was a good thing? To the idea that building up assets with your children or grandchildren’s futures in mind was one of the very noblest, not to mention the most human and natural, aims in life? The Bow Group say today's announcement is 'likely to represent the biggest stealth tax in history'. It's hard to think of another one that could destroy assets built up over a lifetime in just a few short years.
Some might argue that if your estate is worth £100,000 you are comparatively very rich and should share your wealth with others. Why not increase inheritance tax across the board then – not just on those who are unfortunate enough to suffer illnesses like dementia and need care? Or introduce wealth taxes, if you are that way inclined.
The Dilnot proposals to cap an individual’s care costs have been replaced by something worse. Wouldn’t it have been possible – and fairer and better – to engineer pooled risk among the general population, providing a kind of social care insurance? We're all going to get old one day.
Under the new rules, if middle-class home-owners want to hand on money to their loved ones, they will just have to make sure they die the right way. Get dementia, lose most of your wealth. Die suddenly of a heart attack, your family will be looked after. Is the Conservatives' drastic solution really the best they could come up with?