Gale's View 20/02/2013
February 20th 2013
A cheer, one but not yet three, for the Government`s announcement that the amount of money that a person will be required to personally pay out in nursing care fees, will be capped. In spite of protestations by successive administrations that “something needs to be done” this is the first government to address the fact that some people, homeowners but otherwise of very modest means, have found themselves having to sell the roof from over their heads in order to pay to live in a nursing home. Hitherto the thrifty, those who have scrimped and saved and bought a house in the hope and expectation that they might, one day, be able to leave the results of their hard work for the benefit of their children or grandchildren have found themselves penalised as a result of their savings while the spendthrift who have spent as they go and have put nothing aside have found the tab for all of their care needs picked up by you and me, the taxpayer.
It is not quite as simple as that, of course. There are plenty of hardworking people who have paid their way all their lives but have never managed to put enough aside to even entertain the idea of owning their own home. Having paid their taxes they have a right to expect to be cared for in their old age. But, so, too, do those who have saved. The system has to be fair.
Following the publication of the Dilnot report this government has taken one small step in the right direction. The cap, at more than £70,000, is much higher than Dilnot would have wished but in an age of austerity the Chancellor has very little room for manoeuvre. He has done what he can with the money available and although some of the funding will be clawed back by not raising the inheritance tax threshold the fact is that two people still have to own a pretty large house, or a lot of money, or both before they start to pay tax on their estate.
The catch, I fear, is in the fine print. People believing that they will now have to pay “only” £70.000 in care home fees before someone else starts to pay the bill are in for a rude shock. Much of the cost of residential and nursing care is in the “hotel” costs, the “bed and board” if you like. It is only the cost of nursing care that will be set against the cap and the bar is set so high that a person will have to live in care for quite a long time before the state cuts in and starts to pick up even a modest part of the bill. So if the Secretary of State wishes, as he has said, to create a situation in which nobody will have to sell their home to pay their fees then a lot more work is going to have to be done before the scheme achieves his desired result. Nevertheless, this is progress and we should recognise that fact. Those of us in parliament now have to make sure that this is not seen as “job done” but very much as work in progress.
An ageing population has to be paid for and we cannot allow a growing number of elderly and frail people to become an intolerable burden upon the taxes paid by a diminishing number of younger working people. But if those in work are going to be persuaded to save and to make provision for themselves in their old age then we have to make sure that it is worth their while, that they can hand on some of the fruits of their labours and that they will not have to go on paying for something that others are getting for “free”. If we do not achieve that then people will no longer bother to save at all and the consequences of that will place a completely unaffordable strain upon the economy. Instead of handing on assets to our grandchildren we shall end up handing on only national debt.