Elderly care costs ‘should be capped at £50k’

PENSIONERS should have their care costs capped at £50,000 and should not spend more than a quarter of the value of their assets on care home bills.

The cap would be paid for by the introduction of property taxes worth £2.3billion, according to a think tank’s final report which is published today.

Council tax should be abolished in its current form and taxes levied on up-to-date property values, Resolution Foundation’s Intergenerational Commission concludes.

This would allow the threshold at which people with assets would have to start paying for their care to be set at £150,000 – but with a £50,000 cost cap.

The elderly would not be forced to sell their homes and all local authorities should allow payments to be made after the person’s death – potentially aligned with deferred payments of the new property tax.

Former pensions minister Baroness Altmann said: “Social care funding comes mostly from those people who need care, in the form of a draconian meanstest which takes away almost all their life savings and assets.

“Successive governments have failed to prepare for the costs of rising numbers of older people needing to be looked after.

“Care funding is left to local authorities whose budgets have been squeezed for years. They cannot afford to pay the full cost of care for those who qualify for council support, so they pay less than it costs care providers to provide the care.

“Those companies then charge private payers a premium to make up the shortfall. So not only do families have to pay for their own care, they also have to pay for others too.”

The Commission says a new intergenerational contract is needed to tackle the challenges facing Britons young and old.

Our ageing population is set to push up public spending by £24billion by 2030 and £63billion by 2040.

But the question of who pays is causing friction between older people – who say they paid their taxes so they can be taken care of in old age – and younger workers who see themselves saddled with bigger tax bills.

To readdress the balance, the Commission is also calling for a £2.3billion NHS levy on pensioner earnings and says 25-year-olds should be offered a £10,000 Citizen’s Inheritance.

David Willetts of Resolution Foundation, said: “Replacing council tax with a progressive property tax will provide the funding care desperately needs.

“And a system where those with assets pay for their care, with strict caps to prevent costs spiralling, will finally give people the assurance they need that our care system is there for them if they need it.”