Allies of Theresa May say she is aware of the electoral perils posed by the state of both social care and the NHS
Allies of Theresa May say she is aware of the electoral perils posed by the state of both social care and the NHS © AP

Theresa May is considering changes to the social care system that could drastically alter the way Britons fund their care in old age — including the possible introduction of a “death tax”.

In next week’s Budget, Philip Hammond, the chancellor, is expected to announce hundreds of millions of pounds in emergency funding for social care. However, he and the prime minister are also looking at several other ways to tackle the issue in the longer term.

A committee comprising Whitehall’s leading social care experts has in recent months been examining a wide range of options for funding care for the elderly. Reporting directly to the prime minister, the committee is to address the problems posed by an ageing population and to suggest far-reaching changes that could be implemented at the turn of the next decade.

Reviving the idea of remodelling inheritance tax as a means of recouping costs when elderly people die is one proposal understood to have come under consideration.

This idea was branded a “death tax” by the Conservatives in 2010 when it was first put forward by Gordon Brown, then the Labour prime minister. Mr Brown considered introducing a 10 per cent levy on all estates in addition to inheritance tax, which is now charged at 40 per cent on estates above £325,000.

Alistair Darling, who was Mr Brown’s chancellor, said: “It would have been far better if we had dealt with this issue then. We had cross-party talks on the issue: the Tories went along with it for a while — then they killed it.”

Mrs May’s committee has also studied proposals from Sir Derek Wanless, who reviewed the social care system in 2006. Among other ideas, he proposed that everyone should be entitled to an agreed level of free care, after which individuals’ contributions would be matched by the state up to a defined limit. People on low incomes would be eligible for benefits to fund their contributions.

Also re-examined by the officials is a proposal by Sir Andrew Dilnot, who chaired the Commission on Funding of Care and Support in 2010-11, to place a £72,000 ceiling on the sums individuals would have to pay in old age, with the state picking up any further costs. Ministers announced in July 2015 that implementation of the scheme, which was a Conservative manifesto commitment, would be postponed until 2020.

Chris Wormald, permanent secretary at the Department of Health, said the government had “set out the position” but was unable to confirm what steps were being taken within the department to prepare for its implementation. “We would set out how it would be implemented nearer the time,” he told MPs on Monday.

Other ideas presented to the committee have included compulsory social insurance, akin to the system in Japan, where people over 40 pay compulsory premiums as a contribution towards the cost of care after the age of 65.

Downing Street and the Treasury declined to comment on the proposals, but a Treasury official said: “The government recognises the challenges of funding long-term social care and is working on a solution to make sure people have adequate support throughout their lives. Means testing is in place for those who can afford to contribute to social care costs.”

Allies of Mrs May say she is aware of the electoral perils posed by the state of both social care and the National Health Service. The NHS often has to pick up the slack for a lack of community support by keeping elderly people in hospital when they are medically fit to be discharged.

However, the prime minister believes that additional funding and other resources must be accompanied by proper reforms, even if they are controversial — and the absence of an effective political opposition gives the prime minister more freedom to act.

For instance, officials are also thought to be looking at total spending on elderly people through the pensions and benefits system, as it considers how to find more money for social care.

Simon Stevens, the chief executive of NHS England, told the Commons public accounts committee on Monday that he would like to see “a more fundamental look at the way social care financing links to other aspects of the retiree security offer that the country makes to our older people”.

He added: “I strongly welcome the fact that the prime minister has signalled that is something she has initiated.”

Mrs May is also considering a short-term funding injection, of between £700m and £1bn, to stabilise the social care system. However, it is understood that officials are pondering the best way of ensuring any additional money relieves the pressure on hospitals in areas where “delayed discharges” — when patients remain in hospital because there are not enough care resources for them outside — pose the most acute problem.

One possibility is that the money would be channelled through Sustainability and Transformation Plans — blueprints for the future of health and care services in local areas in England.

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