General Election 2017

In defence of Theresa May’s plan to hit wealthy old people with the bill for care costs

Is it fair to put the snowballing cost of social care on to a generation that has been priced out of the housing market?

BY Rachel Cunliffe | RMCunliffe   /  19 May 2017

It’s official, Theresa May has abandoned older people. So claims shadow chancellor and die-hard Corbynista John McDonnell – and if you listened to him, you’d think the Conservative manifesto launched yesterday included plans to evict pensioners from their homes and leave them out in the cold, warmed only by the distant memory of their winter fuel allowance.

But read the actual policy, and you’ll find it is based on the following radical premise: wealthy people should contribute towards the cost of their own social care.

You might have thought a party dedicated to making the rich pay more would be in favour of alleviating the burden on hardworking young taxpayers by making older people with more than £100,000 worth of assets pay for themselves. It’s exactly the kind of progressive redistribution of resources anyone with a conscience should jump at. But of course, it’s a Tory policy, and therefore automatically evil in the eyes of the left.

Here’s how the Conservative manifesto plan works. Under current rules, if you have assets worth more than £23,250 you (or your family) are expected to pay for the full cost of your social care. Anything below that, and the local council pays. Crucially, this figure does not include the value of your house, meaning cash-poor pensioners living in multi-million pound mansions can potentially get free social care, then pass on their property to their descendants when they die. The new plan would eliminate that discrepancy, raising the threshold to £100,000, but including the value of houses. Since no one wants to see old people thrown out of their homes, the money would only be due after death, taken from the owner’s estate. Essentially, social care would now be paid out of the individual’s children’s future inheritance.

Labour has actually been arguing for higher inheritance tax for years (think about the “death tax” proposed in the 2010 election). This policy might have a similar effect, but it isn’t a tax – inheritance is not being taxed on death, but rather paid back to the state for care already received. Think of it as a social care loan from the state, with an extremely flexible term. As a result, the burden of social care shifts to individuals worth more than £100,000 (hardly hitting the poorest in society) instead of councils, who then have more money to spend on local services – services that benefit pensioners and other residents, like roads, social housing, libraries, education and early-years childcare. It would also leave councils better equipped to provide for older people who do not have any assets, and are therefore the most vulnerable.

There is a misguided idea that social care should be “free”, i.e. not paid for by the individual, but by taxpayers. The numbers tell a rather different story. The percentage of people aged 65 years or older is projected grow to nearly a quarter of the population by 2045. At the same time, those in that age bracket now make up one third of all home-owners – they’re the ones who have enjoyed four decades of property booms, that have resulted in skewing the housing market out out of the reach of most young people today. How can we think it’s fair to put the snowballing cost of social care on to a generation that has been priced out of ever being able to afford their own homes thanks to the advantages bestowed on their elders?

The current system is unworkable and unaffordable, and will only become more so. It is also patently unfair, allowing wealthy pensioners to shirk the responsibility of paying for their own care even if they have enjoyed skyrocketing property values, while their taxpaying grandchildren struggle to buy their first house. Like the pension triple-lock (another misguided policy thankfully axed in this Tory manifesto), it’s a regressive way of distributing wealth from a cash-strapped pool of young workers to an ever-growing number of pensioners, regardless of means or need.

Labour would exacerbate that unfairness, offering “free” social care to all, paid for by the next generation either in taxes or national debt. Theresa May’s plan isn’t perfect, but at least it is grounded in reality. She hasn’t abandoned the old – Labour has abandoned the young.