We keep hearing that Andy Burnham’s government will be the most left-wing since the 1970s, when the namesake of the new chancellor promised to squeeze the rich (Denis Healey actually said ‘property speculators’) ‘until the pips squeak’. But Burnham is about to give the better-off end of the middle classes a huge handout. Rumours abound that the new prime minister is mulling the idea of a National Care Service which, like the NHS, would provide old age care which is free at the point of delivery. How will we afford the £19 billion annual cost? Burnham is reported to be considering abolishing inheritance tax and replacing it with a 10 per cent ‘social care levy’, applied to all estates.
Most popular
Stephen Pollard
It’s a disgrace that Ed Miliband is Foreign Secretary
There would be some very significant winners and losers from this policy. For those at the lower end of the wealth scale, who have little income and few assets, it would make no difference at all: they already have their old age care paid for by the taxpayer, and they have little wealth to attract IHT. Move up the scale to someone with a decent pension and a £300,000 mortgage-free property which they were hoping to pass to their children. This is very close to the wealth held by the median household in Britain. Whether they gain or lose will depend on how much care they need. If they are lucky enough to live in good health well into old age and die in their sleep, then they would turn out to be net losers from Burnham’s policy. They won’t have any care needs to be met by taxpayers, but they will in future be liable to pay a 10 per cent tax on their estate which they do not currently have to pay. This bill – £30,000 in the above example – may or may not exceed the care needs which will in future be met by the state.
