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Ill-thought out Tory social care plans won’t work

May 22, 2017

The proposals to pay for residential and home-based social care by taking a charge against the value of people’s property above a floor of £100,000 are so poorly thought through they are almost embarrassing.

We all know there are serious problems in paying for social care and that we have to find ways of funding it that are fair, effective and workable. The Conservative proposals are none of those things.

All the way through their manifesto it shows signs of having been written in haste (which we know it was) with little real debate or discussion and absolutely no sense-checking. It was  written by a small group close to May who clearly reflect her own chronic inability to take advice or listen to alternative points of view. No-where does this serious flaw reveal itself more than in the proposals for paying for social care.

They tell us nothing about how the scheme will work. Simple questions about how properties will be valued can’t be answered by anyone. Will it be the value at the start of social care or at the end (which could be years apart)? How will disputes about valuation be dealt with?

People paying thousands, tens of thousands or even hundreds of thousands of pounds towards their care will expect a much greater choice and higher standards. Providers – local councils – will need to engage with people who will see themselves as customers in a much more enlightened way. Already many local authorities are shying away from the consequences of this by turning their backs on the existing system, as former pensions minister Steve Webb explained to the BBC this morning.

Could they launch an Equity Release boom?

Crucially, they say absolutely nothing about how this new scheme would cope with existing charges on a property and what there is to stop people using a first charge to shield the value of their property from social care charges. If people see the equity in their property as being the prime source of a generous inheritance for their children what is there to stop them taking out an large equity release plan, drawing down the money, and putting it in a trust for their children? Provided they live for seven years and the trust is properly constructed this will even be free from Inheritance Tax.

We all know that property values continue to be a huge distorting factor in our economy but many people have taken that into account in planning their own finances, including how they will cope with lower pensions and pass on money to their children. You can’t rip that up in their faces and expect them to meekly accept it.

As a consequence, the Tories may be about to spark a huge boom in equity release schemes.

There are no case studies, no details, no clarity about how the social care plans will work which is why they have been so easy to attack and dub the “Dementia Tax”.

The similar lack of detail about the plans to means test the Winter Fuel Allowance has also made that proposal easy to turn into a millstone around the Tories’ necks.

This isn’t just about the detail of particular proposals. It is also highly revealing of the style and competency of Theresa May and the small team around her. This is how they work: superficial thinking not shared with people, tested by experts and announced as take-it or leave-it choices. That will really work well in the Brexit negotiations.

One Comment
  1. Nick Starling permalink

    David – I think this is dead in the water. Even the FT headline calls it a “dementia tax”. The moment a proposal attracts that sort of description (poll, mansion, death) it is doomed.

    Like

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