Yahoo Finance Theresa May faces fresh Tory backlash over care fees
Theresa May faced new battles over care fees today as Tories urged fresh concessions to protect middle-class homeowners.
The Prime Minister quelled a major revolt on Monday by promising an unspecified cap on the amount any individual will pay for care in old age.
But senior party figures say further reforms are needed when Parliament gets back, including special measures to prevent homeowners in London and the South-East feeling unfairly targeted. Demands being discussed between MPs include:
Keeping the cap as low as possible to protect homeowners from losing the majority of their estates. One senior MP said he was telling voters the figure should be £72,000 rather than the £300,000 mooted by some.
Regional bandings to reflect variations in property prices, allowing homeowners in high-price regions like London to pass on more of their estates to their children.
Further clarifications to the policy before election day on June 8 if polls suggest the row is still endangering marginal seats.
Mrs May stepped in after a “wobbly weekend” when candidates reported that a manifesto plan to reform care for the elderly was causing havoc.
The plan, dubbed a dementia tax, would allow councils to recoup the costs of elderly care in their own homes from people’s estates after death. It exposed one in 10 elderly people to bills of more than £100,000 — with a small minority losing several times as much.
Experts say the cap promised by Mrs May will mean millions of pensioners losing the winter fuel allowance, worth up to £300. Ministers have earmarked savings from means-testing the annual benefit, which costs just over £2 billion, to fund the cap on care fees. The number who lose the allowance will depend on how low the cap is set.
A cap of £72,000, in line with the Dilnot proposals, would cost £2 billion and mean scrapping the allowance for all 12 million current claimants.
Andrew Hood, of the Institute for Fiscal Studies, said restricting fuel payments to those in the 40p tax band would raise just £100 million, implying a much higher cap. Restricting the benefit to elderly people on pension credit could pull in £1.2 to £1.5 billion.
A manifesto pledge that people will be able to pass on the last £100,000 of their estate — up from £23,000 — is seen as unduly helpful to regions of low house prices. The average house price in London was £490,718 in January compared with £123,781 in the North-East. That means the North-East homeowner could pass on the vast majority of his or her estate, regardless of the care bills he or she runs up. But the Londoner’s estate could be exposed to up to nearly £390,000 of charges.
A government source said the cap would be at a level to create regional fairness. “We hope this will benefit the guy in London as much as the guy in Hartlepool,” said the source. However, the level is not due to be decided until a summer consultation starts.
A tax expert said bills would fall hardest on the middle-classes, especially in London, who had large savings in property but were not rich enough to join complicated avoidance schemes for the very wealthy. Jolyon Maugham QC predicted a boom in “snake oil avoidance schemes” aimed at middle-class people who fear their children’s inheritance being gobbled up by the so-called dementia tax. “It is certain that these measures will encourage people to take avoidance action,” he said.
