‘People will get a nasty shock when they need care for a parent, only to discover how much they will still have to pay, and how bad is the care they receive.' Photograph: David Levene for the Guardian
When a secretary of state announces that he is ending a social "scandal", you might wonder which of the current shockers he has in mind. Perhaps it's the bedroom tax, evicting hundreds of thousands of families. Or is it the coming repossession of mobility scooters from disabled people, while declaring the dying "fit for work"? But no, the scandal Jeremy Hunt means is something else.
Some old people entering residential care have to sell their homes to pay their bills, so their middle-aged children face inheriting less than they hoped. That's unlucky, but not perhaps "scandalous". Yet these inheritors are Jeremy Hunt's top priority, as he spends £1bn extra to protect them, without a penny more going to provide more care for a fast-ageing population. His language implies this solves the care crisis – but he adds not a new cent for it.
You might think this must be a well-crafted vote catcher, nicely timed for a crucial byelection. But no. This omnishambolic government has managed to devise a policy that fails on that front, too. Securing more of older people's savings is partly funded by freezing the inheritance tax threshold, sending the Tory party into new paroxysms of fury. The front pages of the Telegraph and Times blasted, "Cameron abandons inheritance tax pledge" and "Osborne stealth tax on inheritance". Note how those same voices that call for more cuts to benefits for the near destitute want inheritance tax (IHT) exempt from a freeze. But then inheritance was always the Tory party's sacred flame, its embers stoked by George Osborne's 2007 conference coup, when his promise of a £1m threshold sent Gordon Brown into an election-funking panic. Osborne has reneged, and his party is incandescent.
As it is, only couples with property worth more than £650,000 pay any inheritance tax. That is only some 3% of the population. Most of the well-off avoid it by creating the sort of devious but legal "trusts" I wrote about recently, sold by the like of St James's Place. The wealthy who do pay are either ignorant or else they are scrupulous citizens who know that tax is the price we pay for civilisation – and when better to pay than when you're dead?
Look how the Daily Mail describes this small freeze in inheritance tax thresholds: "Thousands more middle-class families every year will be dragged into paying the 40% tax." Why do they call the top 3% "middle class"? That's the trick Conservatives play, deliberately conflating the interests of the very few with the interests of the genuine "middle". What is "middle"? A mere 13% earn enough to reach the 40% tax band starting at £35,000, let alone pay any inheritance tax. Yet every average home owner (price £250,000) is falsely stirred up to fear inheritance tax so that they will support the rich in their neverending fight to avoid it. This paltry tax only brings in £3.1bn a year.
Britain is a country profoundly ignorant about the distribution of its wealth, the electorate suffering under a conspiracy to deceive them. The persistent misrepresentation of the true "middle" leaves most voters clueless as to where they stand on the spectrum of incomes. Even the poor imagine they are much nearer the middle than they are, as the rich pretend to themselves that they are only middling.
New figures from the Resolution Foundation show the widening income gap: 1% of people now take 10% of all income while the entire bottom half receives only 18% of national earnings. Wages keep falling and wealth is sucked ever upwards. Few voters read figures, so how are they to know what is fair in tax or incomes when deliberately misled by media blurring of the true "middle"?
As for Hunt's social care plan, he has made the political error of wildly over-promising a very modest reform. Here is his hyperbole: "This is a watershed moment for our country … These historic reforms will give everyone the protection they want in their old age and save the family home."
None of this is so. People will get a nasty shock when they need care for a parent, only to discover how much they will still have to pay, and how bad is the care they receive. To cap the cost is a good idea: Andrew Dilnot called for a £35,000 maximum. But at £75,000 Hunt's words turn to dust for most, as few ever reach this level of cost. The average stay in a Bupa home is two years, so not many live to hit the cap. His hopes that people will take out insurance to cover their care, now their costs are capped, were quickly shot down by the industry itself this week. No one expects it to take off.
Even the best headline – that everyone can keep £123,000 of their savings – turns out to be less than honest. State aid will be tapered, with only the last £14,000 safe. As the shadow minister Liz Kendall says, local councils will pay only £480 a week for someone in a home, well below the true cost for many. Anyone with any savings pays far more, as the official sum buys bleak care, with a sparse, untrained, poorly paid staff, no pleasures or outings and bedtime at 6pm, when most staff go home. A typical cost is £800 a week, so families will still pay a £360 a week top-up, plus £240 board and lodging.
Hunt boasts that family homes will not need to be sold: instead people can offset care bills, plus interest, against a property's value to be sold after their death. Does that really matter? His extra £1bn helps middle-aged children inherit more of the value, but not usually the house itself.
Is that our most pressing priority, when families are queuing at food banks? Labour is supporting the inheritance tax rise. They focus on the more pressing question of providing better care, not on how to save inheritances. Andy Burnham's plan to fuse social care with the NHS budget will still raise hard questions about how much people should pay for care. Last time Labour came up with a good pooling system for care costs the Tories ran scare posters, "RIP Off: Now Gordon wants £20k when you die." Hunt is getting some of the same medicine.
While the rich and their press fume over inheritance tax betrayal, the danger is that voters think money has been found to cure the care crisis, when nothing new has been added. So be prepared for some Mid Staffs-sized scandals soon in nursing homes and in people's front rooms soon. "Care" may become a word spoken only in irony. With no useful solution, the government should have left this snake's nest alone.
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