What was the dementia tax and why was it axed by Theresa May? Conservative social care funding row explained

THE so-called ‘dementia tax’ was one of the most hotly debated issues during the 2017 General Election.

There was no mention of the so-called “dementia tax” in the Queen’s Speech. But what is the policy and why was it seemingly dropped by Theresa May?

What was the ‘dementia tax’?

The Tory manifesto unveiled in May contained a surprising pledge to shake up the way care for the elderly is funded.

Currently those in residential care have to pay for it themselves if they have assets above £23,250.

People can defer payment until after they die, meaning they do not have to sell their house while they are still alive or while a surviving partner lives in it.

It was announced during the election campaign that this rule would also apply to so-called domiciliary care – care at home – if the Tories won.

It meant those receiving home care would have to pay towards it and the value of their home would be included in their assets, which could be clawed back by councils.

The Conservatives said they were equalising an unfair system – and also quadrupling the savings or assets anyone can protect to £100,000.

The Demos think tank said “hundreds of thousands of the poorest older people” would benefit from raising the threshold.

The shake-up was to be funded by ending the winter fuel allowance for well-off pensioners.

Why was Theresa May’s care funding plan controversial?

Those who receive state-funded care at home would have been worse off if they had assets of more than £100,000 – such as if they own their home – under the proposals.

Traditional Tory supporters said it was an attack on middle-class OAPs who want their children to inherit their property.

And Labour leader Jeremy Corbyn branded it a “tax on dementia”, given those who need long-term care could run up mammoth bills.

He accused the Conservatives of “forcing those who need social care to pay for it with their homes.”

Lib Dem leader Tim Farron said it was a “callous blow for people who have dementia and other long-term conditions, like multiple sclerosis and motor neurone disease, and of course their families.

“It is not just a massive mistake but a cruel attack on vulnerable people the length and breadth of this country.”

And economist Sir Andrew Dilnot – who six years ago proposed a £35,000 lifetime cap on care costs – said the elderly would be left “completely on their own”.

He said: “People will be left helpless, knowing that what will happen is that if they are unlucky enough to suffer the need for care costs they will be entirely on their own until they are down to the last £100,000 of all of their wealth including their house.”

The National Pensioners Convention called it a “Frankenstein’s Monster of a plan” that still failed to tackle the crisis in social care.

Health secretary Jeremy Hunt defended the plans, saying everyone would know they could pass on at least £100,000 to their children.

He said: “You could have a situation where someone who owns a house worth £1million or £2million, and has expensive care costs of perhaps £100,000 or £200,000, ends up not having to pay those care costs because they are capped.

“And those costs get borne by taxpayers and we don’t think that’s fair on different generations.”

Why has the ‘dementia tax’ been axed?

The Queen’s Speech omitted several policies touted in the Conservative election campaign, including the so-called “dementia tax.”

Ministers are to consult on reforming the system of social care funding in England after effectively abandoning the controversial changes set out in the Conservative General Election manifesto.

The manifesto proposal to scrap the planned £72,000 cap on care costs was seen as one of the key factors behind the party’s disastrous showing at the ballot box, despite a dramatic mid-campaign U-turn by the PM.

The Queen’s Speech acknowledged that with the number of people aged 75 and over expected to increase by 70 per cent between 2015 and 2035, the issue of the future funding of social care must be addressed.

But it offered no specific proposals for change, and simply promised to “work with partners at all levels” and to “consult on options to encourage a wider debate”.

In October, Conservative council leaders warned they could not afford to be hit by a £308m rise in care costs if the plans were ever to go ahead.

reported how Tory-run councils would struggle to meet the extra financial pressure placed on them.