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www.telegraph.co.uk/politics/2018/07/24/taxpayers-could-asked-pay-lump-sum-retirement-levy-plans-considered/
Ministers are considering a so-called “retirement levy” which would see taxpayers pay a lump sum to the Government in order to meet the spiralling costs of residential and social care in old age.
The proposals would see retirees make a one-off payment into a ‘national care fund’ which would go towards meeting the costs of funding their stay in residential homes, it is understood.
Officials in the Treasury and the Department for Health are considering the scheme as an alternative to hiking taxes to pay for the country’s social care costs, which are expected to soar as the number of over 65s balloons by 75 percent in the next two decades.
A similar scheme was floated by Damian Green, Theresa May’s former deputy, at a talk earlier this year, where he proposed establishing an “insurance proposition” of £30,000 per person, most of which would be paid for through downsizing or equity release.
Sources close to Matt Hancock, the Health Secretary, didn’t rule out the move, with one telling The Telegraph: “Nothing is off the table”.
Meanwhile, a senior Government source said that ministers were considering “various ideas” around funding social care, adding that they were determined “not to burden younger people” with ever higher taxation.
“What happened at the election last year showed that people don’t understand the current system, and the current system is not fair,” they added.
However, the proposals are likely to trouble Conservative backbenchers, who are still smarting from the disastrous “dementia tax” pledge put forward in the party’s manifesto during the 2017 election.
The proposal, which raised the ‘floor’ from which people pay for their care from £23,250 to £100,000 but crucially included people’s properties in calculating their assets, triggered a public backlash and was widely blamed for costing Theresa May her majority.
There are also suggestions that people unable to afford the lump-sum could defer payment until they die, a proposal which bears similarities with a 2010 Labour policy denounced as a “death tax”.
A Whitehall Source attempted to play down the proposals on Tuesday, telling this newspaper that the Treasury was engaged in “lots of conversations” and remains nervous about a scheme aimed at voters’ assets.
They added that ministers believed post-Brexit economic growth could generate the revenue necessary to meet additional social care spending, negating the need for a levy.
In a speech hosted by the Reform think tank in May, Mr Green proposed that people entered into a scheme similar to “compulsory car insurance”, which would ease pressure on ministers to increase taxes.
To do this, he suggested that most people liable for the payment downsized, citing figures showing that the average equity released from downsizing was approximately £60,000.
Alternatively, for those unwilling to move, an equity release product could provide an insurance premium which would pay into the fund.
If given a green light, the proposals could be put forward in a Government green paper on social care, due to be published in the coming months.