The Tory Party’s proposals on care for the elderly are aimed at one group – present Labour voters in Labour-held midlands/northern seats whose elderly parents live in bought council houses. And get this – technically, it’s actually progressive!

This single policy shift may well lead to the Tories taking a number of ‘safe’ Labour seats in England.

Be in no doubt. This whole debate is nothing to do with security in old age. It’s about people not wanting to lose out on their unearned inheritances. That’s not to be critical of folk – it’s just the way it is.

No-one going into social care will lose their house – under the Tory policy, its value to inheritors will simply be reduced to offset against their care costs and if it reaches £100k, then the state will start paying for the care.

Most people’s wealth today is in capital assets – notably the family home – not income. And medical advances are rocketing the cost to society of care homes. So the value of houses will now be taken into account when assessing the wealth of anyone in care and the ‘discounted’ figure will be increased to £100k. This will mean that the great majority of property-owning elderly folk will now in theory contribute to their care via financial products which will take the capital out of their homes after their death, down to a value of £100k.

The average elderly person in care lives around 3 years before death (here’s a 2011 LSE paper). The average amount this would cost today is around £130k (excluding Nursing care). In London, the average house value is a touch under £700k at the moment and that £130k for care would be taken in full in pretty much all cases. Dementia patients obviously tend to last much longer – this therefore reduces the value of their house much more and that’s why critics are concentrating on this group.

Go outside London, though, and that picture changes. Head to the midlands and north of England, and of course much of Scotland, and you’ll find that plenty of houses, in particular bought council houses, have a present value of £100k or less. The Tories are targeting the inheritors of these properties: “Vote Tory and you can keep £100k if your parent is in care/goes into care. If not, most of it will go on care costs”.

The Tories’ calculation is that most of the better-off are inheriting a multiple of the care-cost figure anyway. In addition, more and more older folk are moving their house into a trust or to their children. Providing this is done some time in advance when they are still healthy, it’s perfectly straightforward to avoid the ‘deliberate deprivation’ rule. Certainly, the Tories don’t think their new policy is going to lead to many wealthier folk moving to Labour, whose manifesto would likely hit them more anyway.

On the other hand, Labour is finding this very hard to respond to and it’s clear they’re already they’re giving very mixed – and therefore ineffectual – messages. They’ve just put out a manifesto purposely hitting the better off – higher taxes are of course broadly progressive. But now they’re also being forced to say how people who own a high value capital asset  and who go into care for dementia should be able to pass the whole value of that asset on to their children. That’s a regressive message to the right of the Tory policy, of course, and it won’t even help counter-act the wider effect of their manifesto in any case.

The whole change in care home policy won’t affect the election in Scotland much, although some folk might be swung towards the Tories in Edinburgh South. However, it serves as a good illustration of how a UK government policy can harm the ability of a Scottish government to make its own policy even in devolved areas.

These new welfare rules will apply to Scotland, and Scotland will be one of the areas most affected by the reduction in revenue caused by the increase in the cap to £100k. This means that the Scottish government will need to pay for the Tory policy using public money raised through taxation.

Who will champion this new policy in Scotland? Ruth Davidson and the Tories of course. And who will attack the SNP government for shifting money from others parts of its budget to filling the gap caused by the policy? That’ll be Ruth Davidson and the Tories, of course (with a bit of help from Scottish Labour, if they’re not careful…)!

18 Responses to Tories’ change to care-home funding targets children of ‘bought’ council house owners and the Scottish government
  1. I suppose we’re edging up to the subject of universalism here. Disclaimer: I’m a huge fan.

    It’s unacceptable that elderly care for those who can’t fund it themselves should be poor quality. People who can no longer look after themselves should be looked after well. However, if good quality care is available to all regardless of means, what incentive is there for anyone to save – or hoard might be a better word – money to pay for their care? If you’ll be provided for anyway, why not go on two cruises a year or even a trip to the moon? Why not pass all your assets to your children? Why not utilise any possible means of sheltering your assets from being used to pay for your care if you’ll get good quality care anyway?

    This is a very similar argument to the healthcare one, and the obvious answer is to provide that free-at-the-point-of-need service, but to tax people enough to pay for it. You’d think, if people see that they’re getting benefits in return for their taxes, they’ll understand that the taxes are worth it.

    Unfortunately in today’s right-wing society this doesn’t seem to be working. People start to see it as a virtue to hoard money to pay for their own potential future needs rather than pay over a levy of some sort so that everyone is covered. “Why should I pay for someone e;se’s kid’s healthcare?” is something I’ve heard from Americans.

    It’s so short-sighted. Money sould be spent as much as possible. Maybe it would be a good thing if older people spent that money instead of hoarding it. Good for cruise companies, but also good for many other businesses and the economy as a whole. As that money circulates, tax is generated and the economy grows.

    But people still have to be cared for.

    I don’t mind paying tax for healthcare or elderly care I don’t in the end need. I’d far rather pay my tax and be glad I didn’t need to be in hospital or a nursing home. But it’s not just that. I’m a member of society and it hurts me to see other people not being cared for. I’d rather pay a decent tax to have people looked after properly than read horror stories of elder abuse and waiting lists for hip surgery and old people unable to heat their homes or feed themselves. I’d rather pay a decent amount of tax than have the constant guilt trip of charity collections.

    Sorry, I’m wittering. Comments anyone?

  2. Eric, I’d like to second what Richard said.
    If you can find a way to raise your profile that would be very welcome.
    You are a real asset to the debate.

    • That’s kind, Craig, and I really appreciate it. Formal politics was a disaster, but it’s nice to chip in a bit in a constructive way alongside folk like yourself.

  3. On the face of it it’s a pretty straightforward sensible solution to funding your care if you own a property. If you don’t then the state funds it.

    Is it a tad too cynical to suggest however that this will drive many homeowners into the hands of equity release companies who will happily hand over a third of a houses value so they can clean up when the owner pegs it. This may have the effect of placing more and more of the housing stock into corporate hands. A very Tory thing to do.

    It’s maybe far fetched but there does seem to have been an increase in firms peddling this in recent years.

    Far be it from me to trample on self righteous common sense. Just saying. It doesn’t affect me at all btw.

    • That’s an interesting thought, Dave. I agree with Morag, but I’m not sure what the equity release companies do with the properties. I imagine they sell them on with their margin’s coming from the discounted figure they get the house for in return for what is in effect a kind of loan against the property?

  4. This may be slightly heretical, but I don’t see why the value of a house should be protected when someone moves into a care home.

    If I decide to move house, I don’t expect to keep any equity in the house I’m moving out of. I sell it and use the proceeds to buy the one I’m moving into. Alternatively, I might decide to sell my house and rent instead of buying. I would use the proceeds of the sale to fund my future rent. This is normal.

    So why is it so different when someone decides to move house into a care home rather than simply to a new bought or rented property? If they’re now living permanently in the care home, why do they want to keep their old house as well? Isn’t that like wanting to move to a rented house, but not wanting to sell the house you’re moving out of? It doesn’t make sense to me.

    I appreciate people want to leave money and property to their children, but life doesn’t always allow that. If the parent needs to spend that money while they are still alive, on living expenses of one sort or another, my feeling is, well hard lines on the offspring but them’s the breaks. I don’t see why the inheritance of middle-aged people should be protected at the expense of the state shouldering the living expenses of their elderly parents.

    Disclaimer. I’m the beneficiary of parents who bought a council house, to the tune of £100,000 as it happens. But I inherited that because my mother sold the house while she was still alive and moved in with me. I looked after her myself until she died aged nearly 95. If she had had to go into residential care I really don’t see why the money she owned (from the proceeds of her house sale) shouldn’t have been used to pay for that. I was always aware that might happen, although in the end it didn’t.

    On my own part, a significant part of my retirement planning involves figuring out how much residential or nursing home care my house could fund. Fortunately, the answer is, “sufficient”. I see absolutely no reason why the value of my house should be in any way shielded from having to pay for this. I mean, if I’m in residential care I’ve moved out. I’m not living in the house any more. Why on earth wouldn’t I use the proceeds of the sale to fund my new accommodation, whatever it is.

    Maybe it’s different for people with children. I really don’t care that much whether various assorted cousins of mine, or various charities, inherit the value of my house or not. Nice if they do, fine, but I don’t expect the state to keep me so that that can happen.

    But here’s the deal. If you have children, then you have someone who might, hopefully, look after you in your old age. Someone who might give you a lot more personal attention and love than a care home. As I did to my mother. And if that person takes that on, rather than letting the state pick up the tab, then that’s one way to preserve their inheritance. If for whatever reason you can’t be looked after by your family, then sorry but them’s the breaks. Why should the state pay out to ring-fence someone’s inheritance?

    • As I said, that seems to be a heretical point of view. But it’s one I’ve always held. If someone is temporarily in residential care for rehabilitation or whatever, and can move back into their home, then I totally reject the idea of selling the home that is still theirs to pay for care. But if it’s a permanent move, then why the hell not?

      If someone downsizes from a £500,000 house to a £200,000 so that they can free up that £300,000 difference for living expenses, nobody expects the state to step in and preserve the value of the £500,000 property for their children to inherit. If someone downsizes to a care home, why is it any different?

      Just explain it to me, OK?

      I appreciate that times are hard and of course people want to give their children struggling with student debt and silly-money mortgages and dismal pension prospects a leg up. But why should the state be expected to ring-fence the inheritance of middle-class offspring like this?

    • Thanks very much for this, Morag. You sum up my view perfectly, actually. I hadn’t thought of the comparison with moving house and that does seem like a valid and useful illustration. Leaving £100k as a minimum for inheritors seems pretty generous, really, and maybe a fair compromise? Inheritance tax is set at £325k at present. There’s an interesting interplay, in moral terms at least, between where we set the threshold for care homes and where we set the inheritance tax-free figure.

      • It’s something I never gave much thought to when I suggested to my mother (who was then 90) that we should move in together to make it easier for both of us all round. Whether her money would become “vulnerable” to being used for care home costs if it came to that, in a way that it would not have been if it had still been invested in the house she wouldn’t be living in anyway if she had moved to a care home, wasn’t something that really crossed my mind.

        My view was that while she was alive, all her assets were hers, full stop. Anything that needed to be spent to give her whatever she needed would be spent. I kind of vaguely hoped that wouldn’t happen, and indeed it didn’t. But if it had, I wouldn’t have been whining to the taxpayers to pay for my mother’s accommodation in order to give me a bigger inheritance.

        If the state has decided that it’s fair that £100,000 should be protected and able to be passed on to someone’s heirs then fair enough, but I don’t see in that case why it should only apply if the money is invested in a house at the time. Apart from anything else, it seems a perverse incentive for an elderly person not to sell up in their later years and move in with a son or daughter – when such a move might be exactly right for them at the time.

      • It seems to me there’s a fair bit of entitlement thinking going on. If someone is no longer living in a property, but is living elsewhere with significant living costs that need to be covered, and will never live in the original property again, where is the logic in whining “they’re being forced to sell their home!”

        Yeah, that’s how it goes. You move to a different address, you’re “forced” to sell the one you’re moving out of to finance the move. What’s so strange about that?

        It’s unfortunate that it’s a bit of a lottery. Someone like my mum may die never having needed to be in residential care, and hey presto I inherit. Someone else may need five years in a nursing home, bye-bye legacy. I can see a bit of logic in protecting an element of inheritance here, but to be honest that sort of magnanimity doesn’t really sound like Theresa May’s style.

        But it’s always a lottery. You know what they call the retirement generation now? The SKI generation, or something like that. “Spending the Kids’ Inheritance.” Your well-off parents may blow the lot on two cruises a year and maybe a trip to the moon if that becomes available, and that’s a risk we all take.

        My mother didn’t do that. (OK, I took her on cruises and she paid her way but she was always careful with money.) But while she was alive her money was HERS to do what she wanted or needed to do with it, and if what she needed to do with it was pay to be looked after properly by professional people who could cope with complex needs, then that is exactly what I would have wanted her to do with the money. I don’t expect the state to bail me out here.

        What I DO expect is that the state will take care of all the old people who don’t have the money to pay for it themselves. The people who have worked in low-paid jobs and only have a small pension. But then, what if they don’t have the money because they went on two cruises a year in their seventies, and maybe that trip to the moon? It’s a thorny problem.

      • I suppose my worry, not having children of my own, is that the state stops funding elderly care at all. Or at least stops funding decent elderly care.

        I worry that I have to make enough provision to fund whatever I might need, entirely from my own resources. Fortunately my house is probably worth enough that it will cover residential care for as many years as I’m likely to need it. I’m just glad that’s the case, because it would worry me enormously to be in the position of having to rely on whatever niggardly basic uncaring care a Tory government might decide was available. If these people can decide that someone can live on £100 a week, they’re easily capable of deciding that an elderly person can be cared for for £200 a week and that way lies abuse and squalor.

        I’m GLAD the value of my house is available to meet this need if it arises. It’s part of the planning. I worry about all the old people who don’t have an asset that can cushion the blow at this stage of life. I don’t really worry an awful lot about middle-aged middle-class people who see their parents’ house as a piggy-bank.

  5. I agree with Richard (maybe it’s because we share the same surname), but you’d get my vote as well, we need all the talent we can get

    I also agree the sun is setting on any popularity Ruth has out with the Rule Britannia brigade

    You can fool some of the people……….


  6. A few English will buy into this and help the tories win the GE17. I was hoping that Corbyn would get some labour supporters back . this is aimed at them .

    Cant wait to see R*PE clause ruth attack the Scottish govt with this .

    Most can see through Davidsons charade now .
    Labour voters gave cons a help in the council . Will they really vote for them in a GE ??

    In Scotland i hope not.

    Thank you Eric. enjoy all what your write about and share as much as possible .

    If you ever think of returning to public service i would give you my vote .

    Shame that so many of your former Labour mates can’t do the same . Sheep following the party line regardless of the damage to Scotland.

    • Thanks for this, Richard. Public life is a thing of the past for me, but it’s nice to be able to contribute a little by this means. e

    • Thanks very much, Richard. It is a shame, what’s going on just now. No return for me, though, I’m afraid.

      • I think that’s a wise decision. But I also think you’re extremely smart and thoughtful and humane. I liked you even when you were a unionist, in between thinking “why is this intelligent thinking person a unionist” and “oh no not again Eric!”

        There ought to be some avenue where you can contribute.

        • Thanks so much, Morag. And for all your other really insightful contributions. Actually, doing this week blog and maybe the other odd wee thing is probably the best balance for me.

        • I suppose baggage is hard to leave behind as well. The background of “this guy decked a Tory in the Palace of Westminster” is more easily forgiven by some sections of society than others.


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