Mrs May and her team dared to take on the baby boomers by reforming social care – at least they did for four days before backtracking – and they have paid a price in the opinion polls, and for once, have had to deal with a media backlash. Yet, their policy is (or was) not far from being the right one.
A recent opinion poll showed the Tory lead dropping by five percentage points, but it is still big enough to win the election. But the media, who, on the whole, have been so scathing over Labour’s manifesto, have reacted with fury.
The Tories were planning to bring in a reform to social care in 2020, in which the bill due to be paid for caring for someone with long-term social care needs was to be capped at £72,000. On the other hand, if you had assets over £23,5000 you had to contribute.
Under Tory plans, this is, or was, due to be changed.
Instead, there was to be no cap . That’s fine if you live in a home worth less than £100,000, but a blow if you live in one worth more. On the other hand, nothing is payable until after the afflicted individuals die.
In short, the Tories are/were planning a kind of inheritance tax, a 100 per cent inheritance tax, payable on an asset worth over £100,000, and up to the value of care that the recipient of the care may receive – the news that has broken whilst this was being written is that there is going to be a cap after-all, although we don't know what this cap is yet.
But, if there is any idea that the British middle class hate, it is any form of tax on property or inheritance tax, even if such as idea turns out to be economically sensible.
An alternative form of tax might be a carte blanch ‘care funding inheritance tax,’ commencing at £100,000 regardless of whether the recipient needs care. That way there is no discrimination based on the misfortune of needing long-term care.
But care has to paid for somehow, and frankly taxing wealth rather than income is far more logical.
After-all if there is an income distribution problem, wealth distribution is far more serious. And much of the wealth that has accumulated has nothing to do with hard work – it is purely down to the explosion in house prices.
There is a wider point. Research from the Institute for Fiscal Studies has found that millennials in their early 30s are half as wealthy as those who are now in their 40s were at the same age. People born in the early 1980s have an average wealth of £27,000 each, against £53,000 for people born in 1970s at the same age.
According to the ONS, average disposable income for retired households is £1,700 higher than in 2007. For working households, however, it is £400 a year less.
It is perhaps of no surprise, as McKinsey recently found, that a growing number of families expect their children to be worse off than their parents in 20 or 30 years’ time.
So, what is the answer?
Maybe inheritance is the way wealth can trickle down over the generations, but that does rather discriminate against those who do not have wealthy parents.
Truth is, the Tory policy is a potential economically efficient fix to a very tricky problem – but when it come to their inheritance, the electorate, egged on by the media, don’t care about economic efficiency.
It seems that all policies must be costed, unless they involve taxing the baby boomers – the next in line to inherit from those who currently have dementia – in which case, costing is not important.