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Inheritance tax freeze to fund social care cap of £75,000 Inheritance tax freeze to fund social care cap of £75,000
(7 months later)
The government is expected to introduce a £75,000 cap on the cost of social care, funded by freezing inheritance tax, as it moves to end the "scandal" in which people are forced to sell their homes, Jeremy Hunt has said.The government is expected to introduce a £75,000 cap on the cost of social care, funded by freezing inheritance tax, as it moves to end the "scandal" in which people are forced to sell their homes, Jeremy Hunt has said.
Ministers are determined to protect people's inheritance, the health secretary said, as he rejected suggestions that the Tories were abandoning George Osborne's pre-election pledge to raise the inheritance tax threshold to £1m.Ministers are determined to protect people's inheritance, the health secretary said, as he rejected suggestions that the Tories were abandoning George Osborne's pre-election pledge to raise the inheritance tax threshold to £1m.
Hunt was speaking on the Andrew Marr Show on BBC1 before his statement to parliament on Monday, in which he will outline the government's response to the Dilnot report on funding social care.Hunt was speaking on the Andrew Marr Show on BBC1 before his statement to parliament on Monday, in which he will outline the government's response to the Dilnot report on funding social care.
He recommended a cap on the amount individuals are expected to pay for care when they become elderly and infirm before the state steps in of between £25,000 – £50,000, to be settled at £35,000.He recommended a cap on the amount individuals are expected to pay for care when they become elderly and infirm before the state steps in of between £25,000 – £50,000, to be settled at £35,000.
Hunt all but confirmed the cap would be set at £75,000 after Osborne warned ministers the Dilnot proposal would cost at least £2bn.Hunt all but confirmed the cap would be set at £75,000 after Osborne warned ministers the Dilnot proposal would cost at least £2bn.
The health secretary also came close to confirming reports that the £1bn cost of the new cap would be funded by freezing inheritance tax (IHT) at the current rate of £325,000 until 2019. If IHT, frozen since 2009, increased in line with inflation every year until 2019 it would reach £420,000.The health secretary also came close to confirming reports that the £1bn cost of the new cap would be funded by freezing inheritance tax (IHT) at the current rate of £325,000 until 2019. If IHT, frozen since 2009, increased in line with inflation every year until 2019 it would reach £420,000.
Hunt said: "We have a scandal at the moment that every year 30,000 to 40,000 people are having to sell their houses to pay for their care costs. Around 10% of us end up paying more than £100,000 in care costs.Hunt said: "We have a scandal at the moment that every year 30,000 to 40,000 people are having to sell their houses to pay for their care costs. Around 10% of us end up paying more than £100,000 in care costs.
"If you've got dementia, which is going to affect a million people in the next few years, you have this double whammy. You are trying to cope with this incredibly difficult condition, the loss of your memory, the impact on your relationships with your family. And then you have the double whammy of having to sell your home. That is what we want to sort out.""If you've got dementia, which is going to affect a million people in the next few years, you have this double whammy. You are trying to cope with this incredibly difficult condition, the loss of your memory, the impact on your relationships with your family. And then you have the double whammy of having to sell your home. That is what we want to sort out."
Hunt said the cap was designed to ensure nobody had to pay anything by fostering a culture in which people make provision for their care by making it easier to take out insurance. He said: "There is a misunderstanding about the cap. If you set the cap at £75,000, which is the number the newspapers are talking about this morning, that is not saying we want everyone to pay £75,000 before the state helps.Hunt said the cap was designed to ensure nobody had to pay anything by fostering a culture in which people make provision for their care by making it easier to take out insurance. He said: "There is a misunderstanding about the cap. If you set the cap at £75,000, which is the number the newspapers are talking about this morning, that is not saying we want everyone to pay £75,000 before the state helps.
"Actually we don't want anyone to pay anything at all. By setting an upper limit to how much people have to pay, then it makes it possible for insurance companies to offer policies for people to have options on their pensions so that anything you pay under the cap is covered.""Actually we don't want anyone to pay anything at all. By setting an upper limit to how much people have to pay, then it makes it possible for insurance companies to offer policies for people to have options on their pensions so that anything you pay under the cap is covered."
In the Sunday Telegraph the deputy prime minister, Nick Clegg, writes that the new system should result in nobody having to sell their homes to fund their elderly care, a promise that depends on people taking up private health insurance to cover that initial £75,000 costs.In the Sunday Telegraph the deputy prime minister, Nick Clegg, writes that the new system should result in nobody having to sell their homes to fund their elderly care, a promise that depends on people taking up private health insurance to cover that initial £75,000 costs.
"We will make sure no one is forced to sell their home to pay for care in their lifetime, and no one sees their life savings disappear just because they developed the wrong kind of illness," he writes."We will make sure no one is forced to sell their home to pay for care in their lifetime, and no one sees their life savings disappear just because they developed the wrong kind of illness," he writes.
Hunt dismissed claims that the government was going back on Osborne's pledge in 2007 to raise the inheritance tax threshold to £1m. This was abandoned in the coalition agreement after objections from the Liberal Democrats.Hunt dismissed claims that the government was going back on Osborne's pledge in 2007 to raise the inheritance tax threshold to £1m. This was abandoned in the coalition agreement after objections from the Liberal Democrats.
The health secretary said: "The point of what we are doing is to protect people's inheritance. The worst thing that can happen is that at the most vulnerable moment in your life you lose the thing you have worked hard for – your own house. We are trying to be one of the first countries in the world where people do not end up having to sell their house."The health secretary said: "The point of what we are doing is to protect people's inheritance. The worst thing that can happen is that at the most vulnerable moment in your life you lose the thing you have worked hard for – your own house. We are trying to be one of the first countries in the world where people do not end up having to sell their house."
The shadow care and older people's minister, Liz Kendall, said: "This would be a small step forward for some people who need residential care in five or more years time. But it won't be fair for people with modest homes. Andrew Dilnot recommended a cap on care costs of £35,000 and warned that anything above £50,000 won't provide adequate protection for people with low incomes and low wealth.The shadow care and older people's minister, Liz Kendall, said: "This would be a small step forward for some people who need residential care in five or more years time. But it won't be fair for people with modest homes. Andrew Dilnot recommended a cap on care costs of £35,000 and warned that anything above £50,000 won't provide adequate protection for people with low incomes and low wealth.
"And these proposals won't do anything for the hundreds of thousands of elderly and disabled people who are facing a desperate daily struggle to get the care and support they need right now. More than £1.3bn has been cut from local council budgets for older people's social care since the coalition came to power. As a result, many vulnerable people can't get the support they need and are having to pay more for vital services.""And these proposals won't do anything for the hundreds of thousands of elderly and disabled people who are facing a desperate daily struggle to get the care and support they need right now. More than £1.3bn has been cut from local council budgets for older people's social care since the coalition came to power. As a result, many vulnerable people can't get the support they need and are having to pay more for vital services."
She called for a bigger and bolder response to meet the needs of the UK's ageing population. "We need a ... genuinely integrated NHS and social care system which helps older people stay healthy and living independently in their own homes for as long as possible. This is what Labour's policy review will address."She called for a bigger and bolder response to meet the needs of the UK's ageing population. "We need a ... genuinely integrated NHS and social care system which helps older people stay healthy and living independently in their own homes for as long as possible. This is what Labour's policy review will address."
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