Smoke and mirrors over welfare
Published in: Daily Mail
Today, the government is due to unveil its proposals for dealing with the vexed and emotive issue of how to pay for long-term care for the elderly.
Much anguish has been caused by the fact that thousands of people faced with moving into residential or nursing homes have been forced to sell their houses in order to pay the huge bills for such care.
The Dilnot Commission, which 18 months ago recommended a cap of £35,000 on the bill that an individual in care would be expected to pay before the state stepped in, was thought to have been kicked into the long grass because the Treasury refused to fund the £2 billion cost of the scheme.
Now, however, the Government is expected to announce a modified version of this proposal.
According to advance briefings, it will say that from 2017 it will cap individual contributions at £75,000.
Also, at present if someone holds assets of more than £23,250, they will not automatically receive state help if they need care, but that limit is to be raised to £123,000.
The Government is portraying this proposal as evidence of its social conscience. To which one is tempted to retort that if this is what they think is compassionate and caring, just think what it would look like if they were being callous!
Seventy-five thousand pounds is still a very large sum to pay.
And if both husband and wife had to move into residential care, it could mean that a couple would have to pay up to £150,000 before the state stepped in to help.
Dilnot warned that any cap above £50,000 wouldn’t provide adequate protection for people with low incomes and low wealth.
According to Lord Warner, a member of the commission, a £75,000 cap would still mean pensioners typically losing half the value of their homes before receiving any state help.
And this sum would not even cover the full cost of these care homes’ bills, since residents would still have to fork out for bed and board, which averages about £7,000-£10,000 per year.
What sticks in so many craws is the perception of gross injustice in being grievously short-changed by a welfare system which has failed to keep its side of the bargain.
Here are people who have saved all their lives, prudently invested in buying their homes and contributed in taxes and National Insurance towards welfare costs.
Yet, if they are forced to go into residential care, all of that seems to count for nothing as they watch their hard-earned house and savings disappear into paying the bills.
Yesterday, the Health Secretary claimed implausibly that the Government didn’t want anyone to pay anything at all. By capping the amount people would have to pay, he said, it would become possible for insurance companies to offer long-term care policy options as part of people’s pensions.
As experts have already observed, however, it is unlikely the Government’s proposals would open up such an insurance market, not least because most people won’t feel they need to take out such insurance policies since they believe — despite this latest initiative — the state will continue to pick up the tab for most long-term care.
Worse still, if the advance reports are true, the Government intends to help fund this change by dragging thousands more people into inheritance tax by freezing its threshold for a further three years.
Purely in political terms, it would be astonishing if ministers really are going to re-open this can of worms.
George Osborne was credited with reviving Tory fortunes in opposition when he promised to raise the inheritance tax threshold to £1 million — a pledge that was nevertheless abandoned in the Coalition agreement after objections from the Liberal Democrats.
Merely eight weeks ago, the Lib Dems softened and agreed to increase the £325,000 threshold in line with inflation, but not until 2015. Now, this small and belated move in the right direction is apparently to be reversed once again.
Re-freezing the threshold in these circumstances would be a move of stunningly cynical circularity. For it would mean that, to prevent people in residential care from having to sell their homes — and thus deprive their children of their inheritance — the Government will punish those children for that inheritance by taking more from them in tax.
And all this on money that has, of course, been taxed already — money, moreover, accrued through a lifetime of hard work and saving.
This issue has been further bedevilled by the argument — from both Right and Left — that it’s only the better off who complain about having to sell their homes in these circumstances, and that there is no reason why taxpayers should fund inherited wealth.
But surely prudence and the responsible desire to provide help for your children should be supported rather than penalised — particularly when those who may have frittered away their money instead have their residential care fully funded.
Of course, it must be emphasised that there are many who cannot possibly find the money for such care, not because they are imprudent but because they have simply been low paid all their lives or have never benefited from the good fortune of inherited wealth.
Most distressingly of all, however, those who have assets and those who have none will all find themselves at the mercy of care provision whose standards are appallingly low, all too often delivering not care but the kind of callousness and neglect you would not inflict upon an animal.
And there’s the rub for all of us, both poor and better-off. Long-term care is enormously expensive, and currently grossly under-funded.
With people living ever longer, and with ever more facing far greater infirmity and dependency, that welfare gap will continue to widen and standards will continue to fall.
All this, moreover, while elsewhere government throws billions down the drain in bloated bureaucracies, bungling incompetence or questionable initiatives.
It is insufferable, for example, that the Treasury claims it cannot afford to fund residential care while the annual overseas aid budget of nearly £12 billion is deemed sacrosanct -- even though it largely lines the pockets of corrupt tyrants and kleptocrats who keep their populations in poverty and servitude.
Addressing the urgent problem of long-term care cannot be done in this incoherent way, designed to give the appearance of progress while actually institutionalising an unfair financial burden.
Such tinkering fails to confront the essence of this problem — which is that the welfare state simply cannot meet levels of need which were wholly unforeseen when it was established in the first half of the last century.
The bargain under which citizens pay tax and National Insurance into a welfare pot which the Government disburses according to need has long broken down. And long-term care is where this failure is at its most stark.
The civilised solution is surely to lower the rate of income tax and introduce universal social insurance, by which people must pay into insurance schemes to cover the risk of long-term care (and arguably, health care, too).
This welfare model, so common in other European countries, promotes and rewards prudence and responsibility, cares for the truly impoverished — and equally crucially, raises care standards by giving purchasers the power to change insurance schemes.
Only by thus tackling the core of this problem, rather than using smoke and mirrors yet again, will the Government really end the scandal of the abandonment of the true meaning of welfare.