The Conservative draft manifesto on health outlines their policies on social care for the elderly. The manifesto says:
"we will allow everyone – on retirement – to protect their homes from being sold to fund residential care costs by paying a one-off insurance premium of £8,000."
That is, if people wish to receive residential care when they need it and paid by the state, they will have to pay a voluntary £8,000 retirement tax. At the time the policy was attacked. First, people pointed out that residential social care is very expensive, with the average weekly cost of social care at £980 (source: Audit Commission), so a one-off insurance payment of £8,000 is unlikely to pay for the care that will be needed by the average person. The other criticism of this policy is that it is specifically for residential care and does not cover care in the home, which the Audit Commission says is the most cost effective solution. Further, some charities said they were worried that it would lead to people being admitted to residential care before they are ready for such a move. They point out, quite rightly, that most people want to remain in their own homes as long as possible, but if the Conservative plan had no provision for care in the home it would mean that as soon as an elderly person needed help they would have no option other than to go into residential care.
The Labour government is trying to formulate a policy on social care and recognises that there are the twin problems of the need for flexible care on the one hand and the cost of such care on the other. For this reason the current green paper lists the options so that the public can discuss the options. The Conservatives, opportunist as ever, spun the green paper saying that Labour was planning a secret 10% death tax which would mean that every estate would pay £20,000. This resulted in the Conservatives "Death Tax" poster which has been mercilessly mocked.
The problem with the sordid affair is that the issue is complex and sensitive and affects some of the most vulnerable people in society, yet the conservatives are using tabloid gutter press politics for the sake of simple point scoring at Prime Minister's Question Time.
Let's have a look at where these figures come from. The £20,000 is in the government's green paper. The green paper lists five funding options, but when you read these options keep in mind the Conservative's hysterical noises about a "Death Tax". The options are:
- Pay for yourself. This is the option that no one wants because it has no state help for the poor.
- Partnership. In this scheme people would get a proportion of their care paid by the state, the proportion of the costs paid by the state would be higher for those on lower incomes. This option would mean that most people would have to use their own assets to pay for the remainder of the care costs.
- Insurance. This is a refined version of the Partnership option where the proportion of care costs not paid by the state would be paid by insurance.
- Comprehensive. In this scheme everyone would pay into a state insurance scheme, and everyone who needed care would get it for free.
- Tax-funded. Social care is paid ouit of general taxation. This was rejected because of the "burden on people of working age".
In the explanations for these options in the green paper, typical costs were given, as outlined here:
- Pay for yourself. The average cost is £30,000, but 20% of people will need care that costs less than £1,000 and 20% will need care that costs more than £50,000.
- Partnership. Someone who got the basic offer of a third or a quarter paid for by the state might need to pay around £20,000 or £22,500.
- Insurance. People might need to pay around £20,000 to £25,000 to be protected under a scheme of this sort.
- Comprehensive. The total cost of insurance would need to be between £17,000 to £20,000.
- Tax-funded. No costings were given, but this option had been rejected anyway.
"Alternatively, if people wanted to be able to know exactly how much they would have to pay, most people other than those with lower levels of savings or assets could be required to pay a single, set figure, so that people knew how much they would have to save for. As an indication of the costs, people might need to pay around £17,000 to £20,000 to be protected under a scheme of this sort compared with the average cost of care for a 65-year-old which is £30,000. The cost would be less for people who were over 65 when the scheme was introduced."
This is the source of the £20,000 "death tax" from the Conservatives. However, they omitted the paragraph that followed:
"However people paid, the insurance payment would help people to protect their wealth and the value of their homes. Whether they decided to pay during their working life, during their retirement or after they died, people would know that once they had made their contribution and paid for their accommodation, the costs of their care and support would not prevent the rest of their wealth being passed on to their children. We would also look at having a free care and support system for people of working age alongside this."
This says that the payment may be "paid during their working life, during their retirement or after they died", there is no commitment to a death tax (payment at death), that is just one of the options. Note also that the Conservatives' policy (payment at retirement) is also listed, clearly the government is trying to be open minded about this.
Anyone reading these costing will see a common thread. Of the three most likely options (Partnership, Insurance, Comprehensive) the cost to the average person will be around £20,000. So where do the Conservatives get £8,000 from? This certainly seems a case of Cameron promising jam tomorrow.
The Prime Minister and the Secretary of State were clearly wrong-footed by the Conservative's bizarre choice to present the green paper as a death tax. This payment option is simply one of the options and Andrew Lansley, the shadow Health Secretary, knew this because he had instigated confidential talks between himself, Andy Burnham (the Health secretary) and Norman Lamb (the Liberal Democrat health spokesman) in an attempt to seek a consensus. These talks were apparently held without the initial knowledge of David Cameron, but later when the leader of the Conservatives was informed Lansley says that the leader didn't object. Trying to reach a cross-party consensus is clearly the mature type of politics that we expect, and the sort of politics that Cameron promised us when he became leader of the Conservatives. But breaking the consensus in this way, with a hysterical poster campaign, is clearly despicable. Some MPs report that Andy Burnham was furious:
Several MPs heard Mr Burnham shout at Mr Lansley in the Commons: 'You told me you wanted to reach a consensus on this, and now your lot make wild allegations against us. You have bloody shafted me and you should be bloody ashamed of yourself. You've blown it.' One eyewitness said: 'Andy is usually so mild-mannered but he stood there laying into Lansley.'
Norman Lamb appears to believe that Lansley genuinely intended to create a consensus but was undermined by Andy Coulson, the Conservative communications chief. Whether it was Coulson, or Cameron who decided to break the consensus, it was clearly an underhanded act considering the importance of the subject and the vulnerability of the people affected.
The size of the Conservative "retirement tax" has not been ignored. The three health spokesmen were booked to discuss the issue on the BBC Politics Show on 14 February. In the video of the interview Lansley behaved abominably, showing that the Conservatives have sunk back into the nasty politics that Cameron claimed was a thing of the past. Burnham, clearly still furious about Lansley's behaviour, was reported to have refused to appear in the same studio as Lansley. It is a pity that he didn't, because it has now come to light that Lansley admitted to Norman Lamb before the interview that the plan was not workable in the form that the Conservatives had given in their draft manifesto.
According to Lamb, Lansley said that the Conservative plans were three voluntary insurance schemes:
One, which the Tories have already outlined, costing £8,000, would be for those who wish to be covered in the event they had to go into a care home. The second, said Lamb, was a new admission: a one-off payment of £10,000 to secure care for people in their own home. The third was a "cheaper, stripped down package for critical care at home"
David Cameron wasn't so keen to outline these three options at the dispatch box when he broke the consensus at Prime Minister's Question Time. However, even the third option would still not be enough to cover the costs, being half the cost identified in the green paper.
It is clear that the "death tax" poster was a political stunt. It is also clear that the Conservative policy will be seriously underfunded and unworkable. The sad thing is that there was a possibility of something that is rare in politics: a consensus, and this has been thrown away by David Cameron for the sake of cheap political point scoring at Prime Minister's Question Time.