Gordon Brown: Proposing ‘age tax’
Every working family could face paying an "ageing tax" to provide care for the
elderly, Gordon Brown proposed yesterday.
It would take the form of a compulsory levy to force them to cover the cost
of care home places in the last stages of their lives.
The ageing tax is a central plank of a consultation launched by the Prime
Minister in the face of a growing crisis over who should meet the bills for the
care of the elderly.
But the proposals raise the prospect of the modestly well-off having to pay
twice.
They include no guarantee of ending the hugely unpopular system which forces
elderly people to sell their homes to meet care home bills and deny their
children an inheritance.
Instead, the consultation paper said, means tests will stay and working
people who pay the planned tax will continue to meet the bills of those "in
need" - many of whom have no savings or property because they have never worked
or saved.
It said "housing equity" might still be used to cover costs.
The deepening controversy over the way care home places are paid for - and
the resentment felt by families forced to sell homes - has been highlighted by
the Daily Mail’s Dignity for the Elderly campaign.
Yesterday’s consultation paper, endorsed by Mr Brown and seven Cabinet
ministers, put back any decisions until next year.
But it declared that the Treasury cannot pay the fast-rising cost of care
homes and home help as the number of elderly people increases.
It said 68 per cent of people in care homes and 73 per cent of home help
services are currently publicly funded.
But a "funding gap" of £6billion will open over the next 20 years between the
amount paid by the taxpayer and what will be needed.
It continued: "We think the principle of sharing costs between the family,
the individual and government is right.
"However, we must avoid over-stretching families and individuals, and believe
that it is worth exploring how every adult could contribute in a way that
insures them against very high costs of care and support.
"If every adult makes a contribution, the risks of high costs hitting each
household are reduced."
An ageing tax could run alongside the existing National Insurance levy.
On means testing, the paper admitted that it can penalise people who have
worked hard and made sensible decisions. But without it, "support is poorly
targeted at those who need it most".
The document said government could do a number of other things, including
making private insurance for care and support compulsory.
But independent experts are sceptical. They say the insurance industry has
produced few ideas, largely because people are thought unwilling to pay high
premiums for care they may never need.
The proposal for a new tax brought outrage from the Government’s critics.
There was resentment that Mr Brown, the Chancellor who undermined the private
pension system by taxing pension funds, now plans another tax to pay for care
for elderly people.
Bleak: The future for the elderly in the UK
Jill Kirby, director of the centre-right think-tank Centre for Policy
Studies, said: "This is the Government that wrecked our pensions. It is hard to
have any faith in their proposals for ‘compulsory savings’.
"The best way to encourage people to save for their old age is by reducing
the tax burden and encouraging them to make arrangements for themselves.
"It would help if people’s pensions were not taxed."
Christine Melsom, of Is It Fair?, the council tax campaign which has wide
support from pensioners, said: "The middle classes will carry the burden just as
they do now.
"My guess is that people will pay the tax and their families will still lose
their homes."
Labour has been aware of concern over means testing since before it came to
power in 1997. Tony Blair set up a Royal Commission, but its report was largely
ignored.
The new consultation paper was launched by Mr Brown in a talk at the King’s
Fund, the research group that published the 2006 report on the cost of ageing by
Sir Derek Wanless.
Sir Derek estimated that an extra £10billion is needed to make the care
system work properly.
But there was only a token £31million of new money on offer yesterday.
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