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…)!