General elections aren’t usually about big ideas. They’re usually occasions for the parties to try to come up with visual representations of their opponents that sting, for frenetic arguments about trivial events and for their leaders to pose in unlikely photo-opportunities. Voters are expected to react, not to think.
So Conservative supporters have reacted with trepidation to the focus on their plans for long term care. This was not an afterthought but a flagship policy, mentioned in Theresa May’s foreword. This is terrain the Conservatives have consciously chosen to fight on. The manifesto proposes that:
“First, we will align the future basis for means-testing for domiciliary care with that for residential care, so that people are looked after in the place that is best for them. This will mean that the value of the family home will be taken into account along with other assets and income, whether care is provided at home, or in a residential or nursing care home.
Second, to ensure this is fair, we will introduce a single capital floor, set at £100,000, more than four times the current means test threshold. This will ensure that, no matter how large the cost of care turns out to be, people will always retain at least £100,000 of their savings and assets, including value in the family home.
Third, we will extend the current freedom to defer payments for residential care to those receiving care at home, so no-one will have to sell their home in their lifetime to pay for care.”
Cue much sound and fury about the possibility of an elderly person’s inheritance being eaten into. The opposition have been quick to label this a Dementia Tax. But what are the options?
Not everyone will need long term care. In fact, only something like one in six of us will. For those who need it, however, it can be very expensive indeed. The options are therefore: to offer long term care through the state (either with or without a contribution from the individual); to subsidise the cost of care; to set up an insurance market; or to get family members to undertake the care themselves. All these options have been tried and all have their drawbacks.
Whenever you hear about a risk that some but not all will trigger, you think of insurance as a possible model. Insurance companies have been looking at this area for years. But so far the public have not been interested in paying premiums well in advance, preferring to take their chances. This may be in part through a mistaken belief that the state would come to the rescue, but at least part of the problem is that none of us like the idea of thinking of ourselves as geriatric at any point in the future. It’s hard enough to get people to save for pensions, with the image they conjure up of being old and grey and creaky. Getting people voluntarily to provide for the possibility that they might be senile or incontinent is several steps harder.
In 2010 Labour proposed compulsory after-the-event insurance, levying £20,000 from every estate to pay for long term care. The Conservatives instantly labelled it a death tax (unfair but snappy monickers are not the sole preserve of the left). Whatever the benefits of compulsory insurance, levying money from people who demonstrably didn’t need it was always going to be a tough sell. After Labour’s defeat in 2010, the idea languished.
Labour’s proposal this time – also a flagship policy mentioned in Jeremy Corbyn’s foreword – is for a National Care Service, committing as follows:
“In its first years, our service will require an additional £3 billion of public funds every year, enough to place a maximum limit on lifetime personal contributions to care costs, raise the asset threshold below which people are entitled to state support, and provide free end of life care. There are different ways the necessary monies can be raised. We will seek consensus on a cross-party basis about how it should be funded, with options including wealth taxes, an employer care contribution or a new social care levy.”
So Labour is proposing to build a state system, funded initially at least in part by capped individual payments. Risks would be pooled not through insurance but through the state. Means testing is not mentioned, meaning that the rich who need care would have the bulk of their assets left untouched (though note that wealth taxes are a possible source of funds for this service).
The Conservatives’ proposal leaves care costs as primarily the individual’s responsibility, with a safety net that no one should be reduced below their last £100,000 of assets.
So who should bear the risk that you might need long term care in the future? It is undoubtedly bad luck to become so infirm. It is not immediately apparent why others should pay for that bad luck if you have the assets to do so yourself, at least at the level that the Conservatives are seeking to set as an asset floor. Paradoxically, Labour’s approach is on the face of it more sympathetic to the asset rich than the Conservatives’.
The IFS has criticised Conservative policy because it makes no attempt to deal with the fundamental challenge of social care funding, advocating an insurance model or a social insurance model. The IFS is wrong about this. It presupposes that the question is an insurance problem. But there is no evidence that the public wants the level of insurance that the IFS deems appropriate: as I’ve noted above, insurers haven’t found enough interest in this as an idea. We don’t make drivers buy comprehensive car insurance. Should we make people buy comprehensive care insurance?
What of the politics of all this? The following groups will be concerned about the Conservatives’ policy: the elderly with assets of considerably more than £100,000 who wish to leave their property to their children; the expectant children of the elderly with assets of considerably more than £100,000; and those who think that in due course they might be in one or other of the first two groups.
These are not small groups. Many in their 50s or above will fall into them, especially in southern England. Those with elderly relatives who live in and around London will be especially interested in this. It has to be noted that this is a group who carry particular clout in the media.
Meanwhile, however, what Leona Helmsley would have called the little people will be baffled at the fuss. Many of these are considering voting Conservative for the first time and may well regard this as a cue that Theresa May is drawing up policy for them rather than for the affluent. This group is more likely to be worried about the government messing around with winter fuel allowance.
It’s also worth noting that with its headline “At last, a PM not afraid to be honest with you” the Daily Mail has captured the mood of many in relation to this policy, including quite a few non-Conservatives. Those non-Conservatives probably won’t change their votes over this but not everyone is as mercenary about this as might be thought.
It is likely that as a result of this policy the Conservatives will see an appreciable drop in support among the wealthier, particularly in southern England. If, however, the grafters north of the Severn-Wash line are given a further tug in the direction of a Conservative vote, Theresa May will probably regard that as a reasonable trade-off. Some votes are worth more than others. Right now, working class votes in northern constituencies are gold dust.