Is the Tories’ social care policy really a ‘dementia tax’?

Tories poll

Tories poll lead slips as policy raises
hackles of core elderly voters

In Depth

Opposition to the policy has crystallised around the term
“dementia tax” – a parallel with the poll tax that was
characterised as fatally undermining Margaret Thatcher.

Why “dementia tax”? 

Well, let’s unpack the policy a little, first.

“Currently anyone with assets of over £23,250 is expected to pay
the full cost of their care. If you are in a care home or nursing
home, the value of your house can be taken into account,” says the
BBC.

Under the new policy, you’ll have a higher protected assets
threshold of £100,000, but the value of your home will be taken
into account even if you receive in-home (“domiciliary”) care.

There is little detail on how it would work, except a guarantee
that no one will be made to leave their home and that fees would be
recovered after death. That essentially means it would be a
state-backed equity release scheme.

Critics argue the majority of people who need these services are
those who get dementia in old age, while cancer patients treated
through the NHS for prolonged periods face no fees. 

So, it is being branded a dementia tax – and that is having a
very negative impact on voters.

Is it a tax?

No, it isn’t.

“A tax is a cash contribution to the state’s coffers, taken
directly from your income or tacked on to the cost of something you
buy. It is money to be pooled to finance the needs of the
population as a whole,” says Merryn Somerset-Webb in the Financial Times.

She cites the example of underwear – the state does not buy it
for us even though it is something we all need to buy and wear,
“but do you feel peeved about the ‘knicker tax’ every time you go
into M&S?”.

So why the controversy?

Quite simply, the policy is being seen as a raid on people
unfortunate enough to fall ill when they get old, particularly from
dementia.

Interestingly, concern is coming from both sides of the
political spectrum. Right-wing Tories are aghast that people who
“did the right thing” face not being able to pass on their homes,
while the left is apparently angry that individuals are on the hook
for uncapped social care costs.

The counter argument on the right, articulated by Juliet Samuel
in the Daily Telegraph, is that limiting welfare
only to those who really need it while protecting the concept of
inheritance in general is “true” Conservatism in action. 

On the left, Ben Chu in The Independent writes that upping the
assets threshold four-fold while taking more money from
property-rich pensioners in the south to cover the exponentially
rising social care costs more widely is “the less regressive
option”.

Who is right?

First things first: it is not a tax. But then, neither is the
“bedroom tax”.

As for whether the policy is fair, it is demonstrably fairer
than the current system, which discriminates against those too ill
to stay in their own home and reduces their assets to between
£14,350 and £23,250. 

Arguably however, there is an unfairness at the core of the idea
that some people will need to lose their homes while others do not.
But to oppose this policy, one would need to either come up with a
better model or scrap the entire system as it stands, instead
covering all care with tax revenues.

So where does that money – tens of billions of pounds
potentially – come from? A broad-based IHT tax, or a hefty increase
in NI paid by working age people? Something has to give.