The principle of using housing wealth to fund social care is a fair proposal – just not in this form

‘Heartless, nasty and cruel’ said Tim Farron. An ‘incompetent U-turn’ claimed Ed Miliband. The outcry surrounding Conservative plans, branded a ‘dementia tax,’ to reform social care funded by pensioners’ property wealth culminated in the attempted reassurance by Theresa May that ‘nothing had changed.’ Even the most casual observer to politics will be aware that the party’s electoral success depends heavily on its core support of the elderly – the so-called ‘grey vote.’ An ICM/Guardian poll last month for instance demonstrated that 85% of the over-75s asked intended to vote Conservative. The problem which the country is now squaring up to, however, is the universally accepted notion that social care is underfunded. Following David Cameron’s victory in 2010, the following statistics were deemed a key issue for parliament – 10 million people in the UK are over 65 years old.  The latest projections are for 5½ million more elderly people in 20 years time and the number will have nearly doubled to around 19 million by 2050.

Funding, as we know, would have to be generated to pay for this by a) higher taxation or b) greater borrowing by government. Rather than simply funding this through a national income tax, the idea of drawing on the vast piles of accumulated wealth through residential property to fund elderly care is, on the surface, a sensible idea to partly redress the wealth disparity between young and old. Torsten Bell’s piece for the Resolution Foundation marked this as a turning point for ‘intergenerational fairness,’ given the faltering of past political attempts such as the mansion tax to swing the balance away from the economically active to the more affluent elderly.

The idea based around a false sense of meritocracy that one should not be penalised for ‘working hard, paying your taxes etc.’ is so deeply engrained in society that it fails to recognise the spectacular post-1980s boom in housing values which were caused by complex economics totally outside the control of the vast majority of the population. The reaction to this also highlights the anxiety in this country regarding the transfer of wealth inter-generationally. Assets passed down to younger family members are, aside from further inflationary schemes such as Help to Buy, the easiest path to future housing wealth and create a dramatic range in prosperity among the inheriting classes.

Resolution Foundation - ONS

source: Resolution foundation

The levels of fear which snowballed among middle-England pensioners over the weekend was the prospect of entire life savings and property disappearing down to the last £100k all through no fault of their own. The attempt by the Government to save vast sums of money on funding social care by having no cap on the upper limit was what proved so toxic.

A fairer idea would be to pool wealth from all pensioners with assets over £100k, either through a fixed sum or a percentage of total assets upon retirement or death which contributes to a national programme of social care (see Gordon Brown’s 2010 policy.) The same thinking can be applied to the often wasteful use of the ubiquitous winter fuel allowance and free bus passes for property-rich over 65s. It is misleading and outdated to cast all pensioners as ‘vulnerable’ and given that 76% of them own their properties, it is sensible to use this uplift in property value over the years to contribute to public services. What is clear, however, is the utter outrage this causes when put to the electoral test.

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