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Social care costs in England to be capped at £75k

Care costs are to be capped thanks to inheritance tax changes. Picture: Getty

Care costs are to be capped thanks to inheritance tax changes. Picture: Getty

  • by ANDREW WOODCOCK
 

BILLS for long-term care in old age are to be capped at £75,000 in England, in a £1 billion move to be funded by making more people pay inheritance tax..

Health Secretary Jeremy Hunt told the House of Commons yesterday that the “historic” reforms would save thousands of people from having to sell their family home to pay for care.

But campaigners voiced disappointment at the level of the cap – more than double the £35,000 recommended by the independent Dilnot Commission in 2011.

Thousands more will be hit with inheritance tax bills because of a three-year extension from 2015-16 of a freeze in the £325,000 threshold – £650,000 for couples – at which it kicks in, at 40 per cent. The move effectively means abandoning the Conservatives’ general election campaign pledge to raise the threshold to £1 million.

Alongside the cap, the Health Secretary announced a large rise in the asset threshold beneath which people will receive means-tested government support for care bills. It currently stands at £23,250 and is set to rise to £123,000.

Mr Hunt said the measures, to be introduced through the Care and Support Bill and come into effect in April 2017, will benefit around 100,000 people annually who would not receive support under the current system. Certainty about the maximum bill they may face will allow everyone to buy insurance to protect them against the possibility of care costs.

“We need to become a society where people prepare and plan for their social care costs as much as they prepare and plan for their pension,” Mr Hunt told MPs. “Sadly, this is an issue that governments of all colours have long failed to tackle.

“Whilst there are many other things that need to be done to prepare for an ageing population, these reforms do herald a historic change in the way that care and support is funded in this country.

“Economic circumstances are challenging but these commitments demonstrate our determination to help people who have worked hard, saved and done the right thing to prepare for the uncertain hand that fate deals all of us in old age.

“By introducing these reforms within the timescales and thresholds set out, they will also be sustainable and consistent with our overriding priority to reduce the deficit inherited from the last government.

“We want our country to be one of the best places in the world to grow old. These plans will give certainty and peace of mind about the cost of care, making sure we can all get the support we need without facing unlimited costs.”

Mr Hunt also announced a lower cap on costs for people who develop care needs before retirement age.

Shadow health secretary Andy Burnham welcomed elements of yesterday’s announcement as an improvement on the current “cruel lottery”.

But he denounced the overall package as “modest” and “meek”, telling MPs: “This is a step forward, but it is a faltering one… vulnerable people will still face rising care charges and homes will still be lost.”

 

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