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 reports The Guardian.
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 the 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 Lib Dems – including the health minister, Paul Burstow – who are broadly in favour of the proposals.
Before the election there was a furious row about funding of care for the elderly: a proposal about how much people should pay was agreed between the three parties before the Conservatives reneged, calling it 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 that would make more people 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 be capped, which, it is believed, would encourage insurers to offer cover.
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 million by 2014. Last night, nine key organisations, representing around 17 million people, wrote an open letter to Cameron demanding that he seize the opportunity provided by Dilnot’s proposals. The organisations, including Age UK, the British Heart Foundation and the Alzheimer’s Society, which have never before come together to demand action, say Dilnot’s proposals are “important and substantial”.
They write: “The social care system has been in growing crisis for years. Our organisations deal every day with people at the most vulnerable points in their lives who are either not receiving any social care support or a small level of help that is grossly inadequate to their needs. As a result, hundreds of thousands of people are forced to struggle alone to cope with everyday tasks.
“We call upon the government to take this opportunity offered by the Dilnot commission and produce a white paper in the autumn detailing how it will create a sustainable and fair social care system, including how it will be funded.”
Michelle Mitchell, charity director at Age UK, said she believed the government needed to adopt and build on Dilnot’s recommendations. “The growing crisis in adult care demands urgent action if millions of older people are not to be left without the help and support they need for a decent standard of life,” she told the Observer.
“The Dilnot commission is likely to set out considered proposals on what needs be done. We need the government to promise a white paper, followed by legislation, and to set out clearly how improved social care will be paid for.”
Earlier this week, the shadow health secretary, John Healey, said in a speech to the Institute for Public Policy Research that the government needed to show its commitment to reform.
“If the government demonstrates that they are determined to see a better long-term system of social care put in place for elderly people in our country, then Labour are willing to talk and work with them, and all other parties, to do so,” he said.
“This is a big test for David Cameron. If he fails to rise to this challenge, he will let down older people now and in the generations to come.”
A spokesman for the Department of Health said: “This is a worrying issue for many people and one that has been sidelined for far too long. Once we have received the report, we will consider its findings.”