Ted Grainger is Network Manager at Fighting for a Free Future, and a former Parliamentary Researcher.
According to The Express, Andy Burnham has a new plan to fund social care for the elderly by replacing inheritance tax with a new death tax of 10 per cent of all estates. The obvious reasoning for such an argument is that it widens the tax base and therefore increases revenue. But in doing so, it means that the wealthier pay less than they did previously, whilst estates that currently pay no inheritance tax at all would become liable for a 10 per cent levy.
As a man with strong libertarian instincts, I cannot say that I care too much about how regressive a tax is because, at the end of the day, it is still theft. Quite frankly, the idea of funding social care through taxation is grossly unfair, but at least this idea means more of the people who will actually need state social care pay for it.
If the Prime Minister had planned to ringfence existing inheritance tax revenue for social care, it would have meant taxing those most likely to be able to afford private care – precisely the group which any sensible system should be encouraging to use private provision through tax incentives.
So the Prime Minister’s new idea would shift the burden somewhat onto those that actually require state support. Great.
However, if he was truly serious about this principle, he would go further and revisit the proposals from the 2017 Conservative Manifesto. I am of course talking about one of the most hated manifesto commitments of recent times, the so-called ‘Dementia Tax’. Politicians talk time and time again about their own willingness to do what is right over what is easy. About having the mettle to make the tough decisions. Well Mr Burnham, here is your opportunity to put your money where your mouth is. Require people to release equity in their highly-valued homes if they want the state to look after them.
I am reluctant to use the name ‘Dementia Tax’ because it was, in large part, that moniker alone which killed it. Aside from the name, it was viscerally hated due to the sheer awful way in which the Conservatives advocated for it. No clear cap or guarantee was announced. It was not communicated with nearly enough clarity that the value of the house would only be seized upon death.
This allowed the public to conjure up pictures of frail old ladies with Alzheimer’s being turfed out of their homes by agents of the state. Is it any wonder that this policy was quashed within a matter of days?
Despite the cynical headlines, the policy was perfectly reasonable. The essential premise was that anyone receiving long‑term care would have had their costs met by the state during their lifetime. The bill would then be settled from the value of their home after they died, subject to a minimum amount of equity being left untouched.
This last part was a crucial flaw in the manifesto. The Conservatives failed to provide any indication as to what that minimum amount would be. But the basic idea was that rather than selling up while still alive, people would have been able to stay in their own homes and treat the eventual deduction from their estate as the price of the care they had used.
There are a whole host of nasty illnesses that can befall us in old age. This is a tragic fact of life, but unfortunately someone has to foot the bill for our care. As conservatives, it should be easy for us to say that people should be responsible for looking after themselves.
I will concede for the sake of argument that there ought to be a safety net to ensure that people are not bankrupted from debilitating illnesses. But I cannot concede that people relying on the state to take care of them should still be able to do so from properties worth considerable amounts of money.
It really is a shame given how sound the policy would have been, had the details been presented and communicated outside of a general election campaign. These are the lessons that Burnham should learn from if he is truly interested in reforming social care. To do this policy properly, he could announce a clear floor of say £100,000, at which housing wealth would be protected. He must repeat ad infinitum that housing wealth will only ever be touched after death, and that no one will be forced to vacate their home.
There is also a crucial moral distinction here between a death tax and the dementia tax. A death tax is simply a tithe on dying: it falls whether or not you ever need a minute of social care. The dementia tax, by contrast, is closer to an insurance premium paid out of housing wealth by those whose long decline the state has actually funded. One is a punishment for dying; the other is merely a contribution for services used.
Whilst his current approach is more targeted than previous iterations, it simply does not cut the mustard.
Come on Andy, show us that you’re serious when you say you’re willing to make the tough decisions. If he refuses, it will confirm a suspicion which most of us already harbour: that his appetite for ‘tough decisions’ extends only as far as imposing simple, headline‑grabbing levies that can be spun as painless.
A serious Prime Minister would level with the public that the true unfairness in the current system lies not in asking those with significant housing windfalls to contribute, but in pretending that ever‑rising care costs can be met forever by taxing everyone else. The question is not whether someone will pay; it is whether we have the courage to say that those whose care is funded by the state will pay something back from the wealth locked in their bricks and mortar.
Ted Grainger is Network Manager at Fighting for a Free Future, and a former Parliamentary Researcher.
According to The Express, Andy Burnham has a new plan to fund social care for the elderly by replacing inheritance tax with a new death tax of 10 per cent of all estates. The obvious reasoning for such an argument is that it widens the tax base and therefore increases revenue. But in doing so, it means that the wealthier pay less than they did previously, whilst estates that currently pay no inheritance tax at all would become liable for a 10 per cent levy.
As a man with strong libertarian instincts, I cannot say that I care too much about how regressive a tax is because, at the end of the day, it is still theft. Quite frankly, the idea of funding social care through taxation is grossly unfair, but at least this idea means more of the people who will actually need state social care pay for it.
If the Prime Minister had planned to ringfence existing inheritance tax revenue for social care, it would have meant taxing those most likely to be able to afford private care – precisely the group which any sensible system should be encouraging to use private provision through tax incentives.
So the Prime Minister’s new idea would shift the burden somewhat onto those that actually require state support. Great.
However, if he was truly serious about this principle, he would go further and revisit the proposals from the 2017 Conservative Manifesto. I am of course talking about one of the most hated manifesto commitments of recent times, the so-called ‘Dementia Tax’. Politicians talk time and time again about their own willingness to do what is right over what is easy. About having the mettle to make the tough decisions. Well Mr Burnham, here is your opportunity to put your money where your mouth is. Require people to release equity in their highly-valued homes if they want the state to look after them.
I am reluctant to use the name ‘Dementia Tax’ because it was, in large part, that moniker alone which killed it. Aside from the name, it was viscerally hated due to the sheer awful way in which the Conservatives advocated for it. No clear cap or guarantee was announced. It was not communicated with nearly enough clarity that the value of the house would only be seized upon death.
This allowed the public to conjure up pictures of frail old ladies with Alzheimer’s being turfed out of their homes by agents of the state. Is it any wonder that this policy was quashed within a matter of days?
Despite the cynical headlines, the policy was perfectly reasonable. The essential premise was that anyone receiving long‑term care would have had their costs met by the state during their lifetime. The bill would then be settled from the value of their home after they died, subject to a minimum amount of equity being left untouched.
This last part was a crucial flaw in the manifesto. The Conservatives failed to provide any indication as to what that minimum amount would be. But the basic idea was that rather than selling up while still alive, people would have been able to stay in their own homes and treat the eventual deduction from their estate as the price of the care they had used.
There are a whole host of nasty illnesses that can befall us in old age. This is a tragic fact of life, but unfortunately someone has to foot the bill for our care. As conservatives, it should be easy for us to say that people should be responsible for looking after themselves.
I will concede for the sake of argument that there ought to be a safety net to ensure that people are not bankrupted from debilitating illnesses. But I cannot concede that people relying on the state to take care of them should still be able to do so from properties worth considerable amounts of money.
It really is a shame given how sound the policy would have been, had the details been presented and communicated outside of a general election campaign. These are the lessons that Burnham should learn from if he is truly interested in reforming social care. To do this policy properly, he could announce a clear floor of say £100,000, at which housing wealth would be protected. He must repeat ad infinitum that housing wealth will only ever be touched after death, and that no one will be forced to vacate their home.
There is also a crucial moral distinction here between a death tax and the dementia tax. A death tax is simply a tithe on dying: it falls whether or not you ever need a minute of social care. The dementia tax, by contrast, is closer to an insurance premium paid out of housing wealth by those whose long decline the state has actually funded. One is a punishment for dying; the other is merely a contribution for services used.
Whilst his current approach is more targeted than previous iterations, it simply does not cut the mustard.
Come on Andy, show us that you’re serious when you say you’re willing to make the tough decisions. If he refuses, it will confirm a suspicion which most of us already harbour: that his appetite for ‘tough decisions’ extends only as far as imposing simple, headline‑grabbing levies that can be spun as painless.
A serious Prime Minister would level with the public that the true unfairness in the current system lies not in asking those with significant housing windfalls to contribute, but in pretending that ever‑rising care costs can be met forever by taxing everyone else. The question is not whether someone will pay; it is whether we have the courage to say that those whose care is funded by the state will pay something back from the wealth locked in their bricks and mortar.