Sir Julian Brazier is a former Defence Minister, and was MP for Canterbury from 1987-2017.
A great deal is currently being written about resilience – normally an underrated subject in politics. Building resilience should not just be about considering major national or global crises, but also involve asking questions about the likelihood of – and the solutions to – more frequent and more local crises. These range from NHS winter pressures to power cuts to cyber and terrorist attacks.
At the same time, there is an overwhelming view today that social care needs urgent reform and greater intervention from government. Yet there seems to be little appetite for considering these two great issues together: the care of the elderly and its implications for national and local resilience.
This article seeks to show that incentives in current provision, for social care, benefits and tax, are reducing resilience. Some of the current proposals for social care ‘reform’ would worsen this.
The largest category of vulnerable people are those elderly people who cannot live without supporting care. Their domestic circumstances can be divided into four broad categories, listed in descending order of independence:
- Those still in their original homes (whether owned or rented) with visiting carers,
- the growing category of those in specially adapted sheltered accommodation
- those living with family, in so called ‘inter-generational’ arrangements and, finally,
- those in residential care.
How do these categories measure up for resilience?
At first sight, the least resilient group are those people living in their own, unmodified homes; they are reliant on visiting carers, who may not be able – or willing – to come in a crisis. They are also more likely to fall over or have an episode isolated in surroundings which have not been adapted, are most vulnerable in power cuts, for the same reason, and – crucially – they are often difficult to discharge from hospital.
But there are serious problems with the fourth category too. We have seen the problems with care homes in a pandemic. With their communal eating and recreation facilities, such homes have proved principal vectors of disease.
Equally, they have become a major cause of bed blocking, once the dangers of releasing patients to them was recognised. Britain’s higher-than-European-average concentration of people in residential homes has worsened our death rates and increased pressures on the NHS.
As Conservatives, we should also be concerned that residential care is not only the most expensive arrangement (whoever is picking up the bill). It also, for those fit enough to choose, offers the least independence.
This brings us to the two middle categories above.
Dwelling in adapted accommodation and living with younger family members are both comparatively resilient arrangements, and both are much less expensive than residential care.
They also have other features most Conservatives approve of. They offer a degree of independence absent in residential homes. There is also the potential for free childcare in inter-generational arrangements, or where nearby retirement accommodation has been chosen. Both categories offer an antidote to the loneliness of those still stranded with limited mobility in their original homes.
Any new system which aims to promote resilience should direct incentives towards rewarding, rather than penalising, these two middle categories: those who step down to retirement accommodation and those cared for by their descendants. That is how resilience is maximised.
Yet this is far from the case at present. Our commitment to ring-fencing the principal home for tax and benefit calculation purposes is a great policy, but one which has perverse unintended consequences when applied to transfers between generations. The state ends up penalising the heirs of those who aim for resilience, and rewarding many of those whose parents become most dependent.
For example, if an elderly person struggles on in their own home without much money, the state picks up the bill for their carers, and the potential strain on the NHS is maximised. Yet, if they own that home, their heirs will maximise the windfall when they die, compared to the alternatives. This has been exacerbated by the George Osborne tax break on Inheritance Tax, which greatly increases the exempt allowance, if and only if the inheritance is tied up in bricks and mortar.
On the other hand, suppose the same old person were to sell and move into purpose-built sheltered accommodation. They are less likely to have accidents where design has the frail in mind – and easier to release from hospital especially if there is warden assistance or such accommodation was selected to be close to relatives. Such people are also much less at risk in times of crisis – overall, a resilient arrangement.
Yet, from the point of view of their heirs, their estate diminishes, as the cash released from sale of the home is used to pay carers and service fees. If the original home was worth more than half a million pounds, thanks to the Osborne inheritance tax break, the heirs also face paying more tax than if the parent had soldiered on in the original house.
Similar points can be made about the position of families who look after elderly relatives at home, who have sold or moved out of their own houses. The one incentive such families currently get from the system for providing their loving care (and potentially relieving the state) is the carers’ allowance. Yet it is rumoured that there is a plan afoot to means test that. So, if the arriving parent or relative owns the proceeds of selling a property, that allowance would be lost.
It is time we built the promotion of resilience into our design of social care. My proposals are as follows:
- Abolish the Osborne bricks and mortar tax break by re-establishing a single allowance rate for Inheritance Tax.
- Extend that principle across the range of tax and benefit policies for the elderly to ensure that there is no financial incentive for potential recipients of inheritances to encourage their parents/relatives to stay in their homes, if they wish to move.
- Keep the carer’s allowance universal, so that those caring for relatives at home or in nearby accommodation can continue to draw it.
- Resist lobbying from the care sector and residents’ heirs for the taxpayer to take on more of the cost of residential fees to protect inheritances. Despite the political clamour, such proposals would be paid in part from by the taxes of those who are looking after relatives either at home or in neighbouring accommodation. That would doubly incentivise more people to move into residential homes, further increasing cost and – critically – still further reducing national resilience.
- Offer tax incentives to the elderly to move out of family homes into sheltered accommodation, including a permanent end to stamp duty on such properties. (Ironically, many councils pay ‘key money’ to release family accommodation but there is no scheme for owner occupiers). Gareth Lyon’s excellent article on this site pointed out how small this sector still is compared with Australia and new Zealand.
Shakespeare’s adage “sorrows … come not as single spies, but in battalions” is apt in the era of globalisation. We simply do not know what shocks and challenges are just ahead. We must recognise that how we structure social care – and the associated tax and benefit framework for the elderly and their heirs – has profound consequences for resilience in major crises. It is also important for services under pressure in ‘peacetime’.