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Social care reforms: the good and bad news

11 February 2013

9:02 AM

11 February 2013

9:02 AM

Jeremy Hunt is unveiling the government’s long-awaited reforms to the funding of social care today. This is the next announcement in the government’s mid-term review series, and while it addresses a serious issue, it’s probably the biggest disappointment to date, and not just because it doesn’t match the ambition of the reforms proposed by Andrew Dilnot.

The good news is that no-one will have to pay more than £75,000 for the costs of their social care: that is the personal help, washing, and clothing, but not the cost of accommodation or food. The government says this upper limit means insurance companies will now be able to offer policies which cover the money spent up to that £75,000 cap, which means the concerns of charities and campaigners that are widely reported this morning are unfounded. It is finally getting to grips with a serious and growing problem in our society.

The bad news is that the cap itself is higher than Dilnot recommended: his review recommended that the state should step in at the much lower level of £35,000. The Treasury couldn’t stomach the £2 billion cost of that in the current climate (which Dilnot himself acknowledged on the Today programme), and that the cap needed to be higher. This brings us onto our second problem, and the one that will cause problems within the Conservative party: the funding of the £75,000 cap that the government has settled on. This £1 billion system will be funded through a freeze on the threshold for inheritance tax at £325,000 until 2019, which means more families at the lower end of the scale will be dragged into paying the tax. The threshold would have been £420,000 in 2019 without the freeze.

Remember, it was George Osborne’s party conference pledge that the threshold for inheritance tax would rise from £300,000 to £1 million that acted as a major contributor to the Election That Never Was in 2007. This has now become a Pledge That Still Isn’t Happening. Whether or not it’s the better thing to do in order to get to grips with the cost of social care, it means Tory MPs, already rather jumpy after last week’s gay marriage vote and the continuing absence of a tax break for married couples that many had hoped for, have something else to mutter under their breath about, especially when raising the inheritance tax threshold had long been marketed as a totemic Conservative pledge.

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