Opinion: property wealth is still the best answer to the care crisis

There’s a massive hole in funding for care that needs to be filled somehow and the massive wealth held in homes is the obvious answer, argues John Fitzsimons.

The concept of using some of our nation's property wealth to tackle burgeoning care costs is nothing new.

Indeed, it wasn't too long ago that Theresa May was desperately trying to do just that and change the Tory party’s social care policy in the middle of an election campaign.

The Tories took a battering in the press on the weekend after the idea was announced, with it swiftly being labelled a ‘dementia tax’ and, in a complete panic, they fudged it.

The party ended up losing its majority in the House of Commons, and the idea of getting older people to use some of their property wealth to contribute towards their care costs was kicked into the long grass.

Until now, anyway.

We can’t ignore this any longer

This week the papers have been full of talk of the Government drawing up a new green paper on social care, which will be published in the Autumn.

The simple fact is that we can’t ignore this problem, or leave it to the next lot to sort out. According to the Local Government Association, adult social care will be stuck with an annual funding gap of an almighty £2.3 billion by 2020.

And there’s no Brexit dividend, real or imagined, that’s going to plug that particular gap.

The problem with the ‘dementia tax’

According to the briefings the Government has been giving the national newspapers over this green paper –  and lord knows, this lot love a good briefing –  the health secretary is coming up with a way to tackle the flaws with the idea that became the ‘dementia tax’.

That policy called for people who needed social care and had a certain level of wealth –  which included the value of their home –  to contribute towards those costs until they hit a floor of £100,000, ensuring they could still pass something onto their loved ones.

This new plan in the green paper will apparently set a cap on the maximum people would have to pay for social care, while there would also be a ‘floor’ ensuring they still have a certain amount they can pass onto their loved ones after they die.

There’s nothing fair about care

One of the regular criticisms touted around the time of the ‘dementia tax’ launch was that it simply wasn’t fair.

If you had a heart attack and died, then you could pass all of your assets onto your loved ones, whereas if you slowly declined in health and went into care then those assets would slowly be eroded away.

It struck me as an odd argument at the time – my grandmother spent two years in care, and while it was an often stressful experience I’m grateful that she was around long enough to spend more time with my children than if she had died suddenly when she first fell ill. I know she was too.

The fact is that there’s nothing fair about falling ill in your later years, whether it’s dementia, cancer or some other horrible illness.

But there is a giant funding gap specifically for care, and we need to plug it somehow.

And I still fervently believe that the most realistic – and least unfair – way of doing that is asking older people with significant assets to pay something towards their care costs.

Just don’t touch my house

In an ideal world, the NHS would be so well funded that it could cover care costs simply through the taxes that we pay already. The trouble is that we expect quality public services but baulk at the idea of paying for them.

So I’m enough of a realist to accept that isn’t going to happen, in the short-term at least

The alternative then is to ask those people who are unfortunate enough to require care to help with those costs. And yes, that may mean using some of the enormous housing wealth older people are sat on in order to do so.

According to the latest research from Key Retirement, the total property wealth owned by the over-65s in Great Britain is a little shy of £1.1 trillion.

On average, their properties have grown in value by £7,000 a year in every year that they’ve owned those homes.

This isn’t all older people, obviously, but plenty of them are sat on assets worth a small fortune.

Yes, there should be a cap on how much they can contribute towards care costs, and a floor as well if you’re really that wound up about leaving an inheritance, but property wealth cannot be off the table as far as helping with care costs.

I’ll say this from experience - I couldn’t care less about getting anything from my grandparents, I wanted them to enjoy quality care in their later years.

That care needs to be paid for, and if it meant that I didn’t get a bit of money when they passed away, it was a price more than worth paying.

The ‘dementia tax’ was poorly designed and appallingly explained, but it at least hit on a possible way to tackle the care crisis.

If we are going to meet those care costs, then property wealth is realistically going to have to be part of that.

We just need a Government with an actual backbone to make that case properly and stick to their guns, even if it causes a bit of grief on the doorstep.

A tax for the over 40s

The Government aren’t the only ones trying to come up with a solution though.

An alternative idea being mooted is a special tax just for those over the age of 40, with the funds raised going towards care costs. It’s the highlight of a cross-party report from the housing, communities and local Government, and health and social care parliamentary committees.

There would be a minimum earnings threshold to protect the poorest, while the group also called for an additional inheritance tax for rich estates.

It’s notable that even this report accepts that when it comes to delivering accommodation for care, it should continue to be on a means-tested basis.

What do you think? How would you solve the care crisis? Let us know your thoughts in the comments box below.