Theresa May is facing a growing Conservative backlash against her plans to reform funding for social care, with critics claiming she is introducing a “dementia tax” that could amount to a 100 per cent inheritance tax rate for core Tory voters.
Conservative MPs voiced concern about the proposal, a flagship element of the Tory election manifesto, while the Bow Group rightwing think-tank warned that “the anger will be horrendous” once middle-class voters grasped what it meant.
Mrs May’s proposal would require elderly people receiving social care to fund the entire cost, until they reached their last £100,000 of assets which the state would allow them to keep.
Tory MP Bob Blackman said: “Clearly, there needs to be a limit on how much any individual or family should be required to pay.” Another MP told the Financial Times: “It’s a bit of a turkey on the doorstep. Everybody likes the cap.”
Labour, which has been rising in the polls but still trails the Tories by 18 points, according to the FT poll tracker, sees Mrs May’s surprisingly tough stance towards the elderly — traditional Tory supporters — as an opportunity.
John McDonnell, the shadow chancellor, said the “dementia tax” was part of a “Tory triple whammy for pensioners” that included the end of the “triple lock” state pension guarantee and the means-testing of winter fuel payments worth up to £300.
To compound Mrs May’s political problems, David Mundell, the Scottish secretary, announced that all pensioners north of the border would keep the fuel payments because Scotland had “different climatic issues”.
Mrs May made a point of arguing that her manifesto, launched on Thursday, was “upfront and honest” on the challenges Britain faces. She believes the social care reforms are a fair attempt to tackle the rising costs of Britain’s ageing society.
David Cameron had legislated for a £72,000 total cap on social care bills — to be introduced in 2020 — to protect the middle classes from unlimited charges on their estates if they had a long-term condition such as dementia. The cap will be abolished.
There were also ominous rumblings for Mrs May in the Tory-supporting press. The Sun asked on Friday: “Good deal or an Alz tax?” The Daily Mail reported a “backlash as social care shake-up is branded a dementia tax”.
Jon Stanley of the Bow Group said the plan amounted to an inheritance tax of 100 per cent on a £100,000 threshold for anyone needing complex care. He said the “anger will be horrendous” in the Tory shires.
The policy was inserted by Mrs May into the Tory manifesto at the last minute on the advice of Nick Timothy, her co-chief of staff, and against the advice of John Godfrey, head of the Number 10 policy unit, according to two people close to Number 10.
Mr Timothy, an architect of Mrs May’s policy pitch to working-class voters, has long argued the Tories should tax inheritance more heavily while cutting taxes on work and enterprise. He drew up the manifesto in conditions of top secrecy.
The Institute for Fiscal Studies said the inclusion of the family home in the means testing of home-based care for the first time would hit between a quarter and a third of 70 to 79-year-olds who had assets of more than £100,000 when housing was included.
Housing market experts said the Conservatives’ social care policy could encourage more older households to downsize.
Lawrence Bowles, a research analyst at estate agent Savills, said: “It’s no longer such an advantage to keep hold of a potentially oversized, old, expensive property to pass down to the kids, as that inheritance may now effectively come with a hefty mortgage attached if it’s been used as a down payment on care.”
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