Sunday, February 10, 2013

No elderly person will have to sell their home to pay for care.

The coalition government has agreed a new settlement which caps the cost of long-term care for the elderly, and has promised that

"From April this year, no one will have to sell their home to fund care.
Those unable to afford fees will get the right to defer paying."


That's the Coalition's promise to the elderly as made in today's Sun and in other Sunday newspapers. Health secretary Jeremy Hunt will formally announce tomorrow that, from 2017, the elderly will have to pay a maximum of £75,000 towards their care costs before the taxpayer starts to help them.

The aim is that the £75,000 cap - double the amount recommended by Andrew Dilnot's Commission - will strike the right balance between supporting those who've saved, without imposing heavy new taxes on working families.

One of the ways in which the Coalition will fund a reform which is expected to cost £1 billion reform is a further three year freeze in inheritance tax thresholds. This second three year freeze - following one already introduced by Alistair Darling - will raise about another £200 million per year for Treasury coffers.

The reform is likely to be popular with voters. A YouGov survey for The Sunday Times (PDF) finds that 73% of people support a cap on the amount that people contribute towards the cost of care. Only 13% oppose the idea.
There are some concerns and issues with this to which the coalition parties will need to pay attention, such as those highlighted by the Centre fo Social Justice. But I am convinced that this is the right thing to do. A senior government source told The Sun newspaper “We came into power to help those who work hard and want to get on. “This does that, as it means those who have worked and saved all their life and bought a property won’t have it taken away just because they did the right thing. That’s only fair.”

6 comments:

Jim said...

Chris,

I can only think you must have made an error in your analysis, and that the sun has made a small slip when it prints "Those unable to afford fees will get the right to defer paying"

Also I don't think that Jeremy Hunt would announce that "the elderly will have to pay a maximum of £75,000 towards their care costs before the taxpayer starts to help them."

Let me explain.

Throughout your working life you pay premiums into an insurance scheme, this used to be provided on the free market, but, because we are not responsible enough to sort our own pensions and care plans than lucky for us, the nannyist state stapped in. As some of us may not have bought a plan and we are not clever enough to check out firms and research we are liable to fall into a scam. So the state stepped in and made it compulsory for the clever people at the treasury to invest our "insurance premiums" into sound investments for us, so we dont lose our money on cons and have enough for our future needs after retirement. The state named the scheme "national insurance" Its not a tax as such because these investments are made, rather than the current collections being spent as they are collected. Thus the highest tax rate is 45%.

All those elderly people have investments made with their own premiums by the state, It is these now they have been able to mature that will pay for for all the needs of the elderly. They wont need to sell their house, and I think £75,000 can only be a misprint on the insurance exess.(think it should maybe read £750 or so.

To even suggest that it is the premiums collected from todays premium payers, that is paying todays retirement and care fees would be ludicrous. It would be nothing short of saying the UK Government is running the biggest Ponzi Scam in history. Of course that can not be right can it, its exactly that sort of scheme the state protects us from, isn't it.........

Jim said...

such a thought could only happen in a totally insane world, full of trusting gullible people.

It would be like a man who spends his whole life preaching "I can do all things through he who gives me strength - Phil 4:13" resigning due to lack of strength.

Such a silly idea could only ever happen in a totally dishonest profession. Lucky we live in a sane world eh.......

Chris Whiteside said...

Jim,

So-called "National Insurance" Contributions" have never been ring-fenced in either direction. The government can spend more or less than National Insurance raises on the things for which it is nominally a contribution.

That's actually an extremely sore point with many people and if one of the things you are getting at is that the term "National Insurance Contributions" is a very misleading name for this particular levy, you are absolutely right.

Unfortunately, very misleading names abound within the tax and social security system, which is how people like the Labour party are able to get away with referring to a change in the money paid out by government as a "bedroom tax" when it is nothing of the kind.

Will there be a cost to the exchequer of significantly increasing the thresholds above which contributions are required for care and introducing a cap? Yes of course, a huge one, and if that's the point you are making you are right again.

BUT, but, but and again, but ...

(with apologies to Ian Fleming)

I remain to be convinced that the long term costs to the exchequer or society of providing the support are less than the long-term cost of allowing the present unjust system to continue.

Because at the moment it is a massive disincentive to saving and responsible behaviour that those who have saved all their lives can lose almost all their assets in old age if they become ill, while those who have saved and invested nothing receive the same care from the taxpayer.

The present system, not what the government is proposing to do, is the huge Ponzi scheme.

Eventually if successive governments did nothing about the moral hazard it represents, the whole house of cards will collapse because hardly anyone will be stupid enough to bother to work, save, and invest so that the government can tax them to pay for care for those who haven't and allow those who have been reponsible to lose everything.

The government's proposals are not perfect but they are an attempt to do something about this, and I welcome it.

Jim said...

I agree that it is the current system that is the ponzi scheme, yes. I also agree that to expect the state to pay for your retirement, having not saved for yourself is extremely Unjust. It is for that reason I think national insurance should be scrapped.

Most of the welfare state causes problems, unemployment benefit was a good idea as a safety net, for those temporarily out of work, but these days its seen as a life style choice, with those who dont work thinking those who do are stupid.

Those who save and do the right thing, investing in pensions and assets to support them though old age are seen as stupid by those who do not, and expect the state to.

Whilst i do actually welcome a change to the system (and for the record, I do think the recent government proposals are a small step in the right direction) I think much more needs to be done.

The main point of my comment was to point out that national insurance contributions ,which are ring-fenced Http://en.wikipedia.org/wiki/National_Insurance_Fund

Are being used as a ponzi scheme..

Jim said...

I actually forgot to add (one of the down sides of not being able to re read the comment) that since different UK government have been running such a Ponzi scheme, than it can only be right that all previous prime ministers and chancellors be held responsible for the action, and rightfully prosecuted.

To me the government announcement goes no where near far enough. This scheme must end its that simple. It can not continue and can not be improved. Ponzi schemes are illegal and are classed as fraud.

It would be like a drug dealer saying "i am not going to deal heroin to the general population, now I will only deal cocaine and then only to those who can prove they are employed"

Chris Whiteside said...

I'd also like to have seen this go further. But I agree with you that it is a step in the right direction.