Care cap would lead to big tax rises, May told

THERESA MAY has been warned by Matt Hancock, the Health Secretary, that plans for a £100,000 care cap will cost billions and lead to significant tax rises, The Daily Telegraph can disclose.

Mr Hancock told the Prime Minister he was “concerned” that the cap, which would cost £3.4billion, was being included in a forthcoming Green Paper on social care.

In a letter to Mrs May this week, he said it “confers a significant benefit to the well-off at the expense of the general taxpayer”, adding that “raising taxes is likely to be the most promising choice to fund this”. He said that the cap, which would mean people paying a maximum of £100,000 for care over their lifetime, would be “complex” to implement and impose a “real bureaucratic burden on councils”.

People “may well feel it does not offer the kind of reassurance and protection they would like” because it did not cover accommodation costs, he said.

He said that, “given your steer”, the

policy was being included in the Green Paper, but added: “I remain concerned about including this as an option …”

His stark warning highlighted the scale of the divisions at the highest level of Government over its social care policy, the issue that nearly lost the Conservatives the last election.

Mr Hancock suggested that he supported a radical system of insurance to fund care modelled on auto-enrolment pensions. Under the “opt-out” scheme, money would be automatically deducted from people’s pay to cover the cost of their care in later life. He said the Government had done “enough to assure ourselves” there was a “workable model for voluntary insurance”.

However, in a sign of further Cabinet tensions, he disclosed that Philip Hammond, the Chancellor, had raised concerns that the plan could have a significant impact on people’s takehome pay and pension savings.

Outlining his support for the approach, Mr Hancock said: “I believe that we have done enough to assure ourselves that there is a workable model for voluntary insurance. We can also present a spectrum of measures that would encourage people to participate in insurance, from ‘nudges’ at appropriate points to mandating a choice.

“Additionally, there are actions we can take to encourage people to save enough for the premium, such as automatically enrolling people into saving for a premium to make insurance more affordable.”

He argued that a “social insurance” option, a new levy targeted at the over40s, should be included in the Green Paper. The plan, advocated by crossbench MPS, would see a compulsory premium deducted from the earnings of the middle-aged and over-65s to fund the cost of their care in later life.

“Without this option we leave ourselves exposed to criticism that we have ducked the issue of sector sustainability that many are hoping funding reforms will address.”

Under England’s care system, those in residential care face losing all savings and assets – including the value of their house – down to the last £23,500. Governments have repeatedly pledged to make the system fairer, but reform has proved politically toxic.

A Downing Street source said: “The Green Paper will look at a range of options for social care provision.”

A Department of Health source said: “We are determined to make adult social care sustainable.” A Treasury source said: “We are working closely with DH and No 10 to ensure we have a social care system fit for the future.”