The Report published yestersay into care for the elderly posed the question what is fair between the generations?
Should the elderly person pay for their care in a Care home, if they have capital available to do so? Or should the rest of society pay for that elderly person’s care, so they can pass on their accumulated wealth to their children? Or should the children of elderly parents in need of care help pay, if they are to inherit the assets that are saved?
There are several possible answers to this question.
The answer that successive governments have accepted up to today rests on the proposition that any elderly person who can afford to pay for their care home should do so. Those who cannot afford it will be paid for by the state. If an elderly person no longer can live in their own home, that home is sold so the proceeds can pay the bills for rent and service at the Care home. If the elderly person has no means of their own then the state will provide, just as the state provides benefit and pension assistance for them to live in their own home when still capable.
Some want to go to a new model, where the provision of accommodation and hotel services is regarded as part of the elderly person’s care package. All the bills would then be paid by taxpayers, leaving the family of the elderly person free to inherit the full value of the elderly person’s former home, and any other assets acquired over their lfietime.
The Report proposes a mixed answer. The first £35,000 of residential care costs would be paid for by the elderly person, and any balance paid for by taxpayers. It invites a debate over what sum between £25,000 and £50,000 would be an appropriate level of commitment from the elderly person.
The baby boomer generation is sometimes said to have been the lucky generation. No overseas wars were fought requiring compulsory call up. House prices over most of the baby boomer’s lifetimes boomed. It was the first generation where a majority owned their own home, and where they made good money as a result. It is, of course true that some baby boomers were not so rich or lucky. It is also true that if you need to live in your own home its value does not add to your income or your spending power.
To many baby boomers it would seem natural and be popular for the state to pick up more of the costs of care for frail and elderly parents no longer able to look after themselves. The children would then inherit more, which they in turn could pass on to their own children. In their turn baby boomers would benefit from taxpayer assistance if they need nursing home care.
It is likely to prove a popualr policy. It also poses the question of how should it be paid for? Labour’s so called death tax did not seem a popular way. There will doubtless be other suggestions of which tax or taxes could be raised to pay the bills. What is clear is that someone has to pay for it. The children who inherit may inherit more if we go for the Report’s conclusions, but they will in turn have to pay more tax to meet the state’s bills for this provision. The popularity of the measure with the potential heirs will be tempered if the tax to pay for it is not popular.
Mr Dilnot has suggested a National Insurance levy on retired people. That will be unpopular, as it means those who have saved and been prudent will pay yet more tax in retirement than those who have not. The underlying truth is this. The nation cannot get something for nothing. The money has run out and there are limits to how much can be borrowed.
I would be interested to hear your thoughts on whether this is a good scheme or not.