So this post is about the proposed ‘Dementia Tax’, flouted, then retracted, by the Tories last May. And why I fully support it.
Don’t get me wrong, I’m not a Tory. I dislike the majority of their beliefs and priorities, however, I am willing to look at each policy independently and make my own mind up, regardless of party allegiance. And one thing I do know a fair bit about is Adult Social Care (ASC) and the crippling costs of it.
So, in a nutshell, the current ASC funding system works in two ways – If you live in the community (your own house, rented accommodation, supported living, etc.) the amount you pay towards your care is calculated based on your income and savings only, not the value of the house you own and live in. If you have over £23,250 in savings you pay full cost. If you have less than this, you pay a contribution. If you live in a residential care home, the amount you pay towards your care is also calculated based on your income and savings. However, if you own a property they add the value of this to your savings, therefore, chances are you have over the £23,350 threshold and pay full cost. To show an example of this lets imagine Mr X.
Mr X lives at home and gets carers 5 times a day. He owns his own home, mortgage free (valued at £250,000) and has £5,000 in a bank account. The actual cost of his care is £420 per week however he only pays £95 per week towards it. The local authority picks up rest of the bill at a cost of almost £17,000 per year. Mr X then moves in to residential home. He still has £5,000 in his bank and his care now costs £700 per week. Because he owns a property, however, the value of this is taken in to account and he is deemed to have £255,000 in savings now. Therefore he pays the full cost, £700 per week, until he dies or his savings drop to below £23,250. The local authority pays nothing towards his care however may contribute whilst the house is for sale – research Deferred Payments for more information on how this works. There are many nuances that affect charging, however, to make my point the case above is pretty standard.
What Theresa May proposed was to change the scenario so that whilst Mr X lived at home and received carers 5 times a day, instead of deeming his savings to be £5,000, they would also include his house value now. Therefore in this scenario, Mr X would be deemed full cost and have to pay the full £420 per week, saving the local authority £17,000 a year. Now, obviously, if Mr X is living in his home he can’t sell it to pay these bills – not even the Tories would make someone homeless just to pay for care. This means in real terms, the local authority would still continue to contribute towards his care however Mr X will run up a debt to be paid if he sells his house or dies. The caveat of this proposal being the threshold to stop paying full cost increased to £100,000, so in some cases Mr X may die better off under the new scheme still.
The reason this was deemed a Dementia Tax focussed on the fact people living with dementia represented the largest benefactors of care in their own home, therefore, they would be the biggest losers in this scheme. What this actually is, however, is an inheritance tax. And whilst I would usually be dead against such a thing, I am actually for this for two mains reasons.
Firstly, local council’s cannot afford to pay for care. Simple as that. Their budgets are getting reduced whilst more people are living longer and needing support. Other government changes are affecting this also – the introduction of Universal Credit for instance. This new benefit removed certain disability premiums. Whilst this looks like a cut, in real terms for people living with care, this will have no actual effect. For example, someone living in supported living may have a care package worth £1,000 per week. Whilst on an old legacy benefit like ESA they might pay £145 per week towards this. If they moved to Universal Credit, their income may drop by £100 per week, however, all that would happen is their care contribution would drop by a similar amount. So now they would only pay £45 per week towards their £1,000 care package. The government can announce that this has saved millions in benefit payments, however, it has only increased the burden on local authorities to cover the shortfall in care costs. This will have a massive effect on the cost of ASC in the future and has not been highlighted enough. Local authorities cannot afford to continue to pay for care at the levels that will be expected in the future. We need to raise more funds from somewhere and I have no issues with this being through charging people who need the care via taking in to consideration the value off their properties.
The second reason is even more important. This country is at a crucial point where the have and have nots are getting dragged further and further apart. And the main reason for this is home ownership. We all know it is increasingly harder for millennials to get on the property ladder, relying on the bank of mum and dad and inheritance. What this is creating is a new class division akin to the middle ages where the amount of land you own determined your social status. We face the very real prospect, in a couple of generation’s time, of having a very visible divide between the rich and the poor based purely on home ownership. Those who own homes will prosper more and more whilst those who do not, did not marry in to home ownership nor bequeath it, will suffer.
We are not building enough affordable homes, it is extremely difficult to save for a deposit whilst renting, and house prices are too high. The ‘Dementia Tax’ would start to alleviate these issues by ensuring a vast amount of houses are sold as apposed to passed down to family, thus breaking the chain of home-ownership. This would happen by either through the force sale after death due to care debt, or an individual’s foresight to sell up and have some fun before the council take it all anyways. I for one intend to sell my house when I retire and spend frivolously in to my old age until I’m left with nothing. My spending will boost the economy, and my house sale (assuming other follow suit) will drive house prices down due to saturating the market, allowing my grandchildren to get on the property ladder much easier. Oh, and I’ll also enjoy my life while I can.
I would love to see everyone’s care funded indefinitely, however, this is not a realistic prospect. We have to look after our vulnerable, we have to provide essential care for the most needy, and to afford to do this we have to insist that those who have assets to cover the cost pay their share. Taking your house value into consideration is a fair way of doing this and I do not feel it is discriminatory to people living with dementia.
My biggest annoyance with this entire debacle is the fact Theresa May, nor anyone else who had input in to this proposal, had the guts to stand up to criticism and defend it. Instead of trusting the general public to understand that ASC funding is at critical levels and explaining why they felt this was a sensible idea, they backed down under pressure and did a complete U-Turn. This response is endemic in politics and is shameful – too concerned with self-preservation to risk upsetting one cohort or another. Their policies judged by the editors of media outlets and adjusted according to who shouts the loudest. Whilst many may not agree with my stance, at least I’d be willing to evidence why I feel the way I do and have faith that people have the intelligence to take it on board.