Middle class face £35,000 bill to help pay for care in their old age

• Coalition split over new proposals on funding of social care • Review urges insurance policies to cover costs The middle classes should pay the first £35,000 of their old age care and be encouraged to take out insurance to cover that cost, according to a government-commissioned review into the future funding of social care to be published next week. The proposal will ignite the “death tax” row that led to a war of words between the Tories and the Labour government before the last election. The recommendations from economist Andrew Dilnot, which have been seen by the cabinet, are already causing a split within the coalition government, with one senior Liberal Democrat claiming chancellor George Osborne wants to “strangle the proposals at birth”. It is understood that the deputy prime minister, Nick Clegg, is in favour of the proposals but a source said that David Cameron and, in particular, Osborne appeared keen to “park the report in the long grass” because of the potential political pitfalls, and the financial commitments it would involve. There are growing fears that the prime minister will back his chancellor against the Liberal Democrats – including health minister Paul Burstow – who are broadly in favour of the proposals. Before the election last year there was a furious row about funding of care for the elderly after proposals about how much people should pay was agreed between the three parties before the Conservatives reneged, describing it as a Labour “death tax”. All parties agree that the black hole in funding for the elderly, which is expected to reach £6bn by 2020, needs a solution that will also take into account the growing numbers of older people. Currently, social care provided by councils is means tested. If someone needs residential care and has more than £23,250 in savings, capital or assets they have to pay for their care in full. Under the Dilnot proposals, there would be greater investment and, it is believed, a more generous means test would be brought in so that more people would be eligible for cover from the state. However, those with better than modest assets – the middle classes – would be required to cover costs. The amount they would need to pay would, however, be capped – which, it is believed, would encourage insurers to offer cover. But it is unclear how the problem of the middle classes moving their assets around so that they pass a means test would be resolved. Dilnot will say that there should be government investment of up to £3bn and that people should pay between £35,000 and £50,000 towards the costs of their care before the state steps in. But, crucially, the report will set out how conditions could be created in which a market for insurance would thrive, and the system would rely on the middle classes being encouraged to purchase cover for care costs. Under the current system, it is claimed, there are 800,000 older people who need care but do not receive it from the state, a figure that will increase to one

Posted by on June 25, 2011. Filed under News, Politics, World News. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.