“Look after yourselves” – tough plans for the ageing-affluent.

conservative-party-manifesto-i

The nice bits

 

 

Ditching Dilnot’s cap

Ditching Andrew Dilnot’s proposed cap on the amount we pay for our long-term later life care is the biggest attack on wealth I can remember. Protecting personal assets at £100,000 is scant comfort when the average residential home costs more than £50,000 pa and the wealth of most elderly couples (including housing) is several times £100,000. The proposals for long-term care costs will be seen as a living inheritance tax,

Whatever my politics (and I am thoroughly confused what they are called), my instinct is for social justice. My instinct tells me that the alternative to “pay for yourself ” – social insurance – is not the answer. Those who have the means to pay – should pay for themselves.

My instinct tells me that not only have the wealthy, the greatest means to pay, but they have the greatest need for the really expensive care – residential and home-based. Put simply, they die slower.

Social insurance is a tax that spreads the cost across all of society. If implemented for later-life care, those who used social care most and had most means to pay for it, would be subsidised by those who have less use of it and have less means to pay. THAT IS NOT FAIR.


The generational knock-on

One of the unspoken aspects of many baby-boomer’s financial planning is the expectation of inheritance. We laugh uneasily at jokes about Charles awaiting his crown because his wait mirrors our wait for our inheritance, our share of our parent’s estate. Over the years, a windfall can become a “right”. There are many people of my age who have not just anticipated but virtually spent the money coming their way when their parents pass on the estate.

This expectation has been fuelled by successive Governments (especially Conservative) who have clung to the mantra of wealth cascading down the generations. These same politicians have been kicking the cost of healthcare down the road. It’s 10 years since the Dilnot report, the subsequent reports have been read and filed, but until the Conservative Manifesto, no politician has been brave enough to face up to the very real issues of a weakening – if not dementing – older population.

I applaud the Conservatives for confronting the issue head on. It is what the serious commentators such as Paul Lewis and Ros Altmann have been calling for and it is what we now have.


Why now?

I suspect that the answer is part political and part idealistic.

Pragmatically, there has never been an election in recent times that gives the Conservatives such headroom for bad news. The votes lost by declaring this bad news are votes that can afford by Conservative Central Office.

Idealistically, Theresa May has shown a consistency since taking office of standing up for the less well off. This cannot be done simply by pleasing everyone, it requires the comfortable to pay more. She has appointed people to advise her in number ten who have social equality like “Blackpool” in the little stick of Blackpool rock.

From what I can see – this is uncompassionate conservatism – neither patronising nor ingratiating. But it seems right. The alternative – the Cameron/Osborne version of Conservatism, happily ducked this issue – as it did the issue of pension taxation, as a vote-loser which could be the next Government’s problem.

That kind of opportunistic politics belongs to Malcolm Tucker but not to a strong Government acting with integrity. We waved goodbye to Cameron/Osborne because they were weak in integrity though long on smarm.


We cannot have it both ways.

Those of us who are better off cannot have it both ways. We cannot have the privileges of better pensions , our own houses and more health and social care at the expense of other generations and even those within our generation who are unlikely to have such property rights or such claims on the NHS and Local Government.

The promise that no-one has to sell their house to meet their long-term care costs is a good promise. I assume it will mean that debts accumulating from home-based and residential care can become a charge on a property, to be met- like inheritance tax- at the point of death

This system creates a much greater certainty in the planning of public finances and it has the right social consequence. It ensures that surviving partners can continue to live in their home and it enables the next generation to plan for the bib bill coming.


Taking on your parent’s debt

There is a generation of people in this country who are coming into cash as never before, they are those in their forties to sixties who have accumulated wealth coming from pensions and properties which have risen in value inexorably over the past 20 years. To this portfolio of wealth, they have anticipated the arrival of inheritances unencumbered by debt.

The Tory Manifesto is a wake-up call to this lucky generation. The care of their parents is not another nanny-state hand-out , as our university educations were. It comes at a price, and now we are going to have to think what that price is.

Not before time.

long term care

The immediate reality


Further reading

For a broad overview of the issues,  this OECD report is  a good start: http://www.oecd.org/els/health-systems/help-wanted-9789264097759-en.htm .

You can see all the OECD publications on long term care here: http://www.oecd.org/els/health-systems/long-term-care.htm.

For the UK perspective, the best report to read is the now 5-year old Dilnot Commission: (Fairer Care Funding)

http://webarchive.nationalarchives.gov.uk/20130221130239/https:/www.wp.dh.gov.uk/carecommission/files/2011/07/Volume-II-Evidence-and-Analysis1.pdf

 

The Local Government Association 2016 State of the Nation report on social care funding:  http://www.local.gov.uk/documents/10180/7632544/1+24+ASCF+state+of+the+nation+2016_WEB.pdf/e5943f2d-4dbd-41a8-b73e-da0c7209ec12

 

The King’s Fund is a highly (probably the most) credible think-tank commentator on the issue: https://www.kingsfund.org.uk/topics/social-care  – for their publications see: https://www.kingsfund.org.uk/publications/?f%5B0%5D=im_field_health_topic%3A27 . The King’s Fund have a ‘reading list’ facility on their website us a very useful and up to date resource on the future of funding social care, here it is: http://kingsfund.koha-ptfs.eu/cgi-bin/koha/opac-shelves.pl?op=view&shelfnumber=104&sortfield=copyrightdate&direction=desc&_ga=1.152591609.1199701175.1490893892

 

The PSSRU is the leading academic consortium that investigates social care and has produced some excellent research: http://www.pssru.ac.uk/

About henry tapper

Founder of the Pension PlayPen, Director of First Actuarial, partner of Stella, father of Olly . I am the Pension Plowman
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3 Responses to “Look after yourselves” – tough plans for the ageing-affluent.

  1. Andrew Main says:

    By nature the £100,000 levy is up to £200,000 levy on the next generation as it will affect both parents.
    It exposes National Insurance for what it is. To pay for the present bill rather than do anything for the future. The wealthy have paid in more for years and this is the proposed reward.
    Looks like there are going to be a lot more one way tickets to Dignitas
    There appears to be no provision in all this to allow the individual to elect to non resuscitation and palliative care only

    Liked by 1 person

  2. henry tapper says:

    I agree that it begs questions about why there aren’t reserves in Government – (was national insurance ever supposed to cover long term care?)

    Liked by 1 person

  3. Adam Saunders says:

    Thing is, this probably won’t affect those with inherited wealth, so much as those whose only capital/savings/investment/pension is the value of their home. It’s a potentially massive change to cope with in a very short space of time. More so for those with only a very little, than for those with an awful lot.

    I live in an ex-council house on the edge of a council estate in the North East of England. Nice place, enjoy the community that still exists there, but probably one of the cheapest places in the country to live. Still, my house is worth over £100,000 (only just, but you know…). I have certainly not inherited any wealth, and the only reason I can afford that home is because I bought when house prices were a fraction of what they are today, I have been fortunate enough to be in continuous employment for decades and interest rates never went up (phew). I would certainly not consider myself to be wealthy. A lot of everyday folk, in everyday jobs, earning everyday wages will be very hard hit by this Conservative policy.

    Which on the whole (because I have no dependents) I will be able to cope with. If people are going to vote for this disaster for the ‘Just About Managing’, by all means do so; but for goodness sake don’t then spend the next 5 years whinging that no-one told you what it meant or what would happen as a result.

    Happily, as I am unlikely to have any dependence on the state in the next 5 years, I will still be around to say, ‘I told you so…’

    Like

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