Death tax raid on estates could pay social care bill

A COMPULSORY ‘death tax’ to pay for elderly care is being considered by ministers, it was claimed yesterday.

Whitehall sources said the Cabinet Office is looking at imposing a levy on people’s estates to be taken after their death.

Although Treasury minister Jane Ellison ruled out the proposal during a Commons debate, Downing Street declined to deny it was being considered.

The revelation led to the Tories being accused of ‘sheer hypocrisy’ last night as critics pointed out that they had savaged the proposal when Labour put it forward in 2010.

Ministers are desperate to fill a growing black hole in the social care budget, with town halls arguing that the crisis will soon be so bad they will be unable to provide decent care for thousands of pensioners.

Chancellor Philip Hammond is expected to use next week’s Budget to plough hundreds of millions into social care.

But the Cabinet Office is also considering longer-term reform of social care funding, reporting in the autumn.

According to reports, one option being considered is a compulsory levy to be taken out of people’s estates when they die, whether or not they had needed social care. At present, people pay the full cost of their social care until their assets – including property – are reduced to £23,000.

A compulsory levy would in effect be an insurance scheme where people do not pay for the care they receive, but pay a set amount so there is enough in the budget to pay everyone’s care costs.

But under this scheme, the payment would not be taken up front, it would be paid at death. Ministers have pledged to introduce a cap on the amount people have to pay of around £70,000 by 2020. But if a compulsory levy is brought in, it would end the need for a cap.

In 2010, Labour’s then health secretary, Andy Burnham, wanted to bring in a compulsory 10 per cent levy to pay for social care.

This would have left the relatives of earners with estates worth £500,000 with a bill of £50,000, on top of inheritance tax.

Yesterday, an angry Mr Burnham confronted Treasury ministers in the Commons. He said: ‘Back in 2010, to meet the rising costs of social care, I proposed a compulsory care levy on all estates.

‘From memory, the Conservatives produced an election poster with gravestones on it and called it a death tax.

‘I read in today’s Times that ministers are now considering exactly the same proposal. Can this possibly be true?’

Mis Ellison, the Financial Secretary to the Treasury, replied: ‘No.’ Last night Mr Burnham told the Mail: ‘What the Tories did in 2010 was the worst of politics. It’s complete hypocrisy.’ Last night, a source at the Treasury said the idea of a compulsory levy was not being looked at. ‘ This option is not under consideration,’ the source said.

Another source said: ‘ We have already put in the social care precept to allow local councils to raise more money for care.

‘But we are looking at more longer-term reform of social care. This is as much about reform as it is about money.’