It's about time politicians dished out the bitter medicine for social care

From the 'Dementia Tax' to corporate levies, coming governments face an unpopular struggle to get the books in order.

by Matthew Gwyther
Last Updated: 22 May 2017

It’s a classic irony of British electoral politics that among all the poorly thought-out dross of manifesto policy, the most sensible party proposal during this election has created the most noisy opposition - step forward the ‘Dementia Tax’.

This suggested measure actually appears to have halted Theresa May’s relentless rise in the opinion polls. That explains today's 'clarification' from the PM (she refuses to accept it's a u-turn) that there will be a cap on total costs, though she's not going to tell us how big said cap will be. It's not been the strongest or stablest chapter in May's campaign, but her initial policy was on the right track. 

The costs of caring for the elderly and infirm, especially those suffering from degenerative neurological conditions, dwarfs much else. A free school meal probably works out at less than £2.50 per day. But residential care for the elderly can easily reach £2,000 per week and the costs of receiving care at home, although less at around £15 per hour, are considerable.

Quite why people automatically think the state should add this to the long list of its obligations defeats me. And our stubborn refusal to foot the bills ourselves - when we can afford it - is all down to our dodgy attitude towards property, our little castles. Why on earth an asset value windfall such as a normal house which has increased massively in value over the last two decades - without the owner doing anything by the sweat of his or her brow - should be regarded as inviolable, I just cannot understand.

Twenty years ago many ordinary families would have dreamed of a post-death legacy of £100,000 to their kids. As the work and pensions secretary Damian Green said yesterday, it’s quite enough. Why should those surviving relatives who are either unable and unwilling to care for elderly relatives expect the state to do so and then pocket the inheritance legacy?

The point is that for years now we have failed to grasp the spiny cactus of NHS and adult social care. We have watched the quality of both decline in the face of huge increases in demand but nobody has the political guts to do anything about it by getting them properly funded. In both cases it means that we are going to have to ease back on the cradle to the grave approach and put our hands in our pockets. I’d wager the better off will be paying to see their GP within a decade. It’s quite simply inevitable.

As far as business is concerned the proposals from both main parties are pretty hostile. From the downright backward and misconceived doubling of annual tax on hires from outside the EU to the wall-to-wall madness of Labour’s Trot-inspired mess - if it even whiffs of business, tax it.

But business remains schtum, fearful of displeasing May’s cabal who are willing to call out treachery at the merest squeak. Over at Grant Thornton they make a decent living from the fact that the tax code has increased from 3,700 pages in 1995 to over 17,000 pages now. But they are saying enough is enough and point out particularly that corporation tax no longer works on global, digital economies.

GT’s head of tax, Jonathan Riley, has a few suggestions: ‘Corporation tax rules have reached massive proportions with a complex plethora of reliefs. This is especially bad for mid-sized businesses for whom it causes a disproportionate cost burden by having to get help from people like us. It’s reached the point where corporation tax brings in £40 billion and the cost of reliefs are £60 billion.’

So what could be done? ‘Well if you really want to begin to get some sort of proper tax contribution from the likes of Amazon, Google, Starbucks then you need to look at some sort of a tax on transactions or turnover. I think that may help do something about the 66% of people who say they don’t trust business. You cannot get around turnover. Of course nobody has tried it yet and there might be a downside if people stop spending in a downturn.’

Riley also foresees a return to looking at National Insurance for the self-employed which caused Philip Hammond such an embarrassment and a u-turn in his budget. ‘I think Matthew Taylor’s report into working practices and the gig economy will mean he carries the can for increasing NI, despite the accusations of an assault on ‘white van man.’ It’s a £9 billion loss to the exchequer each year and cannot be tolerated - with the widespread use of personal services companies - for much longer.’

Such honesty probably means Riley won’t be entering politics any time soon. He even advocates slapping VAT on children’s clothing. That would be enough to land him in the stocks dressed in a romper suit as his punishment for heresy. At either end of the age spectrum difficult ta x-raising decisions have to be made if we are even going to do anything about reducing the national debt.

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