People in England and Wales could pay a one-off "inheritance levy" of up to £12,000 in return for free long-term care in their old age, under controversial government plans being drawn up to cope with the growing demands of an ageing population. The fee would either be deducted from the estates of older people when they die or paid on retirement. The aim is to replace a system that forces many pensioners to sell their family homes to fund massive nursing home bills. A green paper on long-term care to be published this month is still being finalised, amid concerns that the voluntary levy could be seen as a new stealth tax. Downing Street is understood to favour the idea of spreading the cost of an ageing population more fairly and ensuring that millions of Britons have something left to pass on to their children. Aides have tested the plan in focus groups and estimate that up to 80% of people would choose to opt into a state insurance system for £10,000-£12,000, rather than risk losing their homes and savings if they develop Alzheimer's or another chronic disabling condition. About one in five will ultimately need long-term care. Patricia Hewitt, the former health secretary, said the current system was an unfair lottery. "I have always thought 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," she said. Nursing home bills for the poorest are met by the state, but anyone with savings above £22,250 pays for long-term care, with nursing homes costing an average of £600 a week. The levy will be one of several options for reform in the green paper, but is seen as a potential "big idea" for next year's election, helping to attract older voters. The issue is critical for Gordon Brown not only because he pledged on becoming prime minister to sort out care of the elderly, but because he is under pressure to show he has not run out of headline-grabbing ideas. Concerns were raised at last Friday's political cabinet meeting that public service reforms have stalled. One cabinet minister told the Observer it was clear parental choice in schools, among other policy areas, had not gone far enough, adding: "We are interested in the idea of choice particularly in health and education: sometimes it's not a reality." A planned new blueprint for the economy and public services due to be published was delayed last week amid arguments over how radical it will be, raising suspicions on the Labour left that the price of Brown's rescue by Peter Mandelson is more Blairite policies. Campaigners on long-term care, however, hope the appointments of modernisers Andy Burnham as the new health secretary and Liam Byrne as chief secretary to the Treasury spell bolder thinking. "It's not a question of 'we can't afford it': they can't afford the current system. We are failing very large numbers of elderly and disabled people," said Niall Dixon, director of health thinktank The King's Fund. Stephen Burke, of the charity Counsel and Care, which estimates an inheritance tax levy could raise up to £2.9bn, said it was the fairest way to spread the costs of an increasingly elderly population. Any insurance levy would be a long-term reform, but in the short term ministers are likely to set new minimum standards on services to be provided for older people, likely to lead to rises in council tax. Medical treatment for the elderly is free on the NHS but social care - the costs of living in a home or meals-on-wheels - is not, with huge variations in what councils provide.Inheritance levy planned for long-term care of the elderly
Monday, 15 June 2009
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