The Problem With Social Care Stretches Beyond Any ‘Dementia Tax’

Entitled ‘Forward, Together: Our Plan for a Stronger Britain and a Prosperous Future’, less of a wish than a command, and superficially attempting to shift the focus away from domestic policy and back towards Brexit, much of the Conservative Party manifesto released last Thursday seemed brazenly wrong or patently false.

There was the scrapping of free school lunches for infants; another cut to corporation tax; restated projections for a hard Brexit outside of the single market, while affording an unscrutinised government the opportunity to rewrite law; nothing but a few cultural sops in place of the Northern Powerhouse; a vow to develop the shale industry and allow non-fracking drilling without planning approval; the press let off a second Leveson; a watered down commitment towards worker representation on boards; the prospective return of fox hunting; perseverance in the face of an economically illiterate immigration target; and boasting about an £8 billion rise in NHS spending, in spite of the fact that this merely drags out a pledge first made in 2015, would rely on £3 billion in cuts to training and public health initiatives, and is estimated to still leave a funding gap of £12 billion by 2020.

So it came as something of a shock that Theresa May appeared to have struck upon one reasonable policy proposal, and what’s more, this not snatched right from the playbook of Ed Miliband. But should we lament the sorry state of political conversation, or cheer at May and the Tories receiving their just deserts, when amid the usual torrent of austerity-laden, anti-immigrant, virulently nationalist nastiness, it is good policy which has unwittingly caused the electorate to turn?

May has been accused of a U-turn herself over the Conservative manifesto’s social care proposals, and there is no doubt that she lied after engaging in a reversal post-haste. In the case of somebody paying to receive social care, the manifesto proposed an increased floor or threshold protecting their last £100,000. Currently the floor stands at £23,250, meaning that those who receive social care must be down to their last £23,250 before their remaining wealth is protected and they become entitled to receive care for free.

At the moment however – unlike for people in residential care – people means-tested for care received in their own home do not have to include the price of their home among their assets. This discrepancy was something the Conservative manifesto sought to change. So while it afforded everyone in the social care system with an increased floor of £100,000, at the same time it obliged more people to pay something towards the cost of their care, raising the spectre of people having to remortgage to cover expenses, before potentially having to sell their homes.

According to the proposals, nobody would have been forced to sell their home during the course of their lifetime, and spouses and dependent relatives would not have been compelled to make unwanted moves. Instead those receiving care would have borrowed from the government, with their care costs paid back from their estate after death.

But the perceived unfairness of a vast number of people becoming susceptible to having to sell their homes led to the Conservatives’ social care proposals swiftly being decried as a ‘dementia tax’. It was pointed out that those who die suddenly in old age, or of a disease covered by the NHS such as cancer, will leave all of their wealth more or less intact, while those who suffer from dementia could end up spending tens and even hundreds of thousands, dwindling down their savings and having to forego their homes for the sake of prolonged care costs.

Of course this is precisely the situation already endured by those in need of residential care. And those in need of residential care include many old people suffering from late stage dementia. Between 2001 and 2011, the number of elderly people in residential care remained almost static, ageing significantly as a demographic but showing a total increase of less than 0.3%, from 290,000 people to 291,000. Meanwhile the elderly population as a whole increased by 11%. The costs faced by the social care sector have soared, but the burden of losing almost everything has lingered upon a small number.

Despite an ageing population, there was a £160 million cut in real terms spending on old people’s social care in the five years to 2015/16. By 2020/21, it is suggested that public spending on social care must rise by a minimum of £1.65 billion – to a total of £9.99 billion – simply to manage the impact of demographic changes and to cover unit costs. The question as always is where to find the money.

In 2011 the Dilnot Commission, on social care funding and support, published its set of recommendations. Noting that:

‘The current system is confusing, unfair and unsustainable. People can’t protect themselves against the risk of very high care costs and risk losing all their assets, including their house. This problem will only get worse if left as it is, with the most vulnerable in our society being the ones to suffer.’

the report proposed both an increase in the floor from £23,250 to £100,000, and a cap of between £25,000 and £50,000 – the commission settled on £35,000 – after which individuals would become eligible for full state support. The commission ruled out an additional tax on the general public, whether via National Insurance, Income Tax, Council Tax, or VAT, stated that those with a care requirement should be eligible for state support prior to being subjected to a means test, and noted that its proposals would cost the state around £1.7 billion.

Aside from an additional tax which could be seen as an unfair burden on those of working age, other proposals have suggested a flat or means-tested levy to be paid by old people, either upon retirement or from their estates after death. In 2010, Gordon Brown’s government considered a £20,000 inheritance levy, but the idea was condemned as a ‘death tax’ by the Conservatives, and an adverse general election result put paid to that. Under David Cameron, the Conservatives did commit to a Dilnot-style cap, although of £72,000, but faced with public sector costs of up to £6 billion, the policy was delayed until 2020.

What is abundantly clear is that the Conservative manifesto published last Thursday contained no mention of a cap. The fact was driven home by Health Secretary Jeremy Hunt, who when asked about a cap responded:

‘We’re dropping it because we don’t think it is fair because you could have a situation where someone who owns a house worth £1 million or £2 million, and has expensive care costs of perhaps £100,000 or £200,000, ends up not having to pay those care costs because they are capped. And those costs get borne by taxpayers and we don’t think that’s fair on different generations.’

Hunt may have outlined one of the main criticisms of a cap – the other being that regardless of its fairness, a cap simply fails to cover sufficient care costs – but the surprisingly blunt nature of the Conservative’s proposals soon found the government under pressure from all sides. Sir Andrew Dilnot lamented the lack of a cap by way of an analogy:

‘It’s a bit like saying you can’t insure your house against burning down. If it does burn down then you are completely on your own, you have to pay for all of it until you are down to the last £100,000 of all of your assets and income, so it is just not answering the problem.’

and the Labour opposition denounced an attack on ‘all the older people in our society’ and a ‘tax on dementia’ before settling on the punchier title of ‘dementia tax’.

After opinion polls narrowed in Labour’s favor over the weekend, on Monday Theresa May announced an astonishing U-turn. Astonishing because it came about so suddenly, and after inflicting on the sometimes almost impervious Prime Minister such significant harm, but astonishing too because May refused to take responsibility, absurdly repeating the line ‘nothing has changed’. She said that she was simply ‘clarifying any doubt about our social care policy’ and accused Jeremy Corbyn of making ‘fake claims’, while promising the very cap on lifetime care costs which her manifesto of just a few days earlier had unanimously ruled out.

Theresa May and the Conservative Party can be accused of many things when it comes to social care and dementia: a real terms cut in social care spending, a lack of investment in carers and dementia research, and huge cuts to corporation and inheritance tax which benefit the rich while the rest suffer. The proposals outlined in Thursday’s manifesto were reportedly added at the last moment and without proper consultation, while in making her U-turn, Theresa May continued to carp and regurgitate dishonestly, while refusing or proving unable to state what the revived cap will be. There are also legitimate concerns over the role the private sector might play if more and more old people are forced to borrow against the value of their home.

Yet for all that the Conservatives did not just invent dementia. Those suffering from the disorder in residential care already pay through the nose. The sense of a Tory attack on the elderly has no doubt been exacerbated by the context, in which they have also pledged to means test winter fuel payments and scrap the pension triple-lock. In fact taken together, an increased floor and a shared burden for those in residential and domiciliary care, the removal of winter fuel payments for the wealthy, and a less generous pension guarantee can be seen to amount to a rare Tory stab at equality – if only austerity and tax breaks elsewhere didn’t leave the picture woefully skewed.

For their part Labour have promised to spend an extra £8 billion on social care. They are strong on the failings of the current system, but less clear on how any additional spending will be funded, committing themselves only to a consideration of the options and a cross-party consensus. The Liberal Democrats have the most coherent policy offering, pledging a 1p rise in all rates of income tax, which they say would raise around £6 billion which would be ringfenced for social care services and the NHS.

Still even the more lavish solutions offered by Labour and the Liberal Democrats are estimated to leave a shortfall in NHS and social care spending by 2020/21. The temptation to lash out at the Tories might be difficult to resist, but the furore over a ‘dementia tax’ feels like something of a mishit which has landed by virtue of a circuitous and scaremongering route. For all of the United Kingdom’s political parties, a rapidly ageing population presents a problem yet to be fully grasped.

A version of this article was originally published at The Shimmering Ostrich.