Government rules out death tax to fund care

The government has ruled out a compulsory "death tax" to fund long-term care, despite saying the newly formed care funding commission can examine all options.

By Jeremy Dunning on July 22, 2010 in Adults, Older people, Social care leaders

The government has ruled out a compulsory “death tax” to fund long-term care, despite saying the newly formed care funding commission can examine all options.

Liberal Democrat care services minister Paul Burstow said yesterday that prime minister David Cameron’s steadfast opposition to a compulsory levy on estates remained, suggesting any recommendation from the commission to adopt the model would fall on deaf ears.

The issue provoked a huge pre-election row after the Tories accused the then Labour government of planning to introduce a £20,000 tax on estates to fund care, accompanied by a poster of a gravestone.

But following the launch of the Commission on the Funding of Care and Support on Tuesday, health secretary Andrew Lansley said he would not want to “pre-judge” its conclusions.

Addressing a summit of local government social care leaders, Burstow stressed just two options had been ruled into the commission’s discussions. These are a voluntary insurance scheme, as backed by the Tories; and the Lib Dem-favoured partnership model set out by Derek Wanless in his 2006 report for the King’s Fund, under which all users would receive state funding that they would then top-up.

He said “there may be another scenario that may come out of those two”. But he added that while the commission would be free to look at other options, the final decision rested with ministers.

Burstow added: “The prime minister has made his views very clear both before the election and in the past 24 hours that his view about the death tax is unchanged and the commission will be reporting to ministers within the next 12 months and minsters will wait for final decisions.

“I think there are enough clues in that to give you a sense of what is possible and what is not, but equally we want to give the commission the opportunity to debate those issues openly with people to come to a solution.”

The three-person commission will be chaired by economist Andrew Dilnot and will include former social services directors Jo Williams and Lord Norman Warner, who is a former Labour health minister. It must submit the criteria against which it will adjudicate on competing options to ministers within two months.

Burstow said its role was to “do a technical job of identifying a solution to the funding of long-term care”, and to forge a “settlement” that took account of the “trade-offs” between factors such as fairness and value for taxpayers, and not a “consensus”.

He said there may have to be more than one solution because of need to deal with the “transition generation”, who would have care needs when any reforms were implemented, and people with lifelong care needs.

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Guide to the members of care funding commission