SubScribe: May 2017 Google+

Monday 22 May 2017

Dementia tax life stories: a portrait of the future

This is fancy. But not, I think, fanciful.

Photograph from Disability Direct, Derbyshire 

Caz is in her fifties. Divorced, she lives with her teenage son in a rented flat. She has a minimum-wage job at the local school that just about keeps the pair of them fed and clothed.

Caz has two brothers, Graham and Michael, both happily married with young families of their own, in reasonable jobs that pay the mortgage.

Their mum died a few years ago. Their dad, now 85, still lives in the family home he bought when he first married 60-odd years ago. It’s nothing special, but the mortgage has long been paid off and, with the housing market boom, it’s probably worth between £250,000 and £300,000.

Dad had been managing ok on his own, but he suffered a stroke a couple of months ago.  He seems to have recovered better than the family feared physically, but the children are worried about his mental state. He seems to be more forgetful.

It turns out that a form of dementia is quite a common side-effect of stroke.  Dad insists on staying at home, but the council is sending people round to look after him. They call in two or three times a day to get him up and dressed, give him some lunch, and put him to bed. He doesn’t really want to go to bed at 7 o’clock, but what can you do? The children all have jobs and their own families to look after. Caz’s son Liam is doing GCSEs and can be quite stroppy. She’s got more than enough to cope with, but she still tries to go round to see her Dad every couple of days and she texts and calls daily. Graham and Mike both ring the old man every week and visit at least once a month to take him out for a drive.

It becomes clear that Dad’s condition is deteriorating, so the family have a conference. The boys obviously can’t give up their jobs, but the Prime Minister has introduced a new policy that gives people the right to take a year’s leave from work to care for a relative. They decide that if Caz gives up the flat and she and Liam move in with Dad, they might be able to manage on the carer’s allowance of £62.70 if she can find some part-time bar work.  They might have to dip into dad’s savings to top up, but that’s fine. That’s what they’re for.

No one expects Dad to live long after the stroke. But he does. He becomes more frail and more forgetful. Caz gets increasingly frustrated and she’s soooo tired. Liam is still stroppy. He’s doing A levels and wants to go to uni. The prospect of fees and student loans and huge debt terrifies Caz, but she admires his ambition and work ethic.

Caz didn’t go back to work after her year of unpaid leave was up. She just couldn’t leave Dad and, anyway, things at the school had changed beyond recognition. Some teachers had lost their jobs and the cuts were biting.

Mike and Graham still come to take Dad out for a pub lunch or to the cricket, but they don’t call as regularly as they used to.  They’re relieved that Caz is there to look after the old boy, but don’t realise how much work is involved. They think that because the carer still comes round, she is getting all the support she needs. To be honest, she’s not as much fun as she used to be. Snappier, somehow, so they tend to avoid seeing her as often as they did. There’s always an excuse, though they prefer to see these explanations for their absence as “reasons”.

The family knows that a bill is racking up for the care the council provides, but they don’t realise that there will be interest to pay as well. They are just glad that they haven’t got to move Dad out of his home and that they are able to defer the payments.

Dad dies shortly before Liam is due to graduate from uni.  His cash savings have long been used up on living costs, but he has a few treasures: his long-service gold watch, the diamond engagement ring he bought Mum, a collection of first-day cover stamps. He leaves the ring to Caz, the stamps to Mike, the watch to Graham.

When the value of his estate is calculated for probate, the treasures – probably worth about £5,000 between them – are included. There aren’t really any other assets other than the house, which is valued at £300,000.

Social services need every penny they can get, so they are soon on the family’s case, seeking payment for years of care.  The final account comes as a shock.  But if you think about it, three visits a day for five years is bound to cost a lot.

Fortunately, Mrs May has promised that no one should be deprived of their last £100,000, so they’re let off some of the bill.

They sell the house. It doesn’t raise as much as they’d hoped, but that’s life. It wasn’t worth holding out for more as they’d have had to give the extra to the council anyway.

The estate agent’s bills, legal fees, house clearance people are all paid. The three children take their mementoes and then share out the proceeds of Dad’s estate.  They come away with £30,000 each.

The boys’ careers are still on track. But Caz is now approaching 60 and has no home.  Her inheritance might be enough for a deposit on a flat, but without a full-time job who would give her a mortgage? And where will she find a “proper” job? For now she’s still doing shifts at the pub and is back in a rented flat . Liam is threatening to come back and live with her while he tries to find a job.

So that’s fine then? After all she’s got £30,000 in the bank.

The man who lived next door to Dad died last summer. He had cancer, poor chap. But he was well looked-after to the end.  The house has just been sold. It fetched £325,000. His son is buying a new Range Rover and his daughter is planning to build an extension to her house. The rest will make sure that the grandchildren don’t come out of uni with too much debt.

Thank heavens for Mrs May’s fair society.

Sunday 21 May 2017

Dementia tax or fair play on social care funding? How the papers changed their tune

There is a perception that greedy baby-boomers are responsible for any and every economic ill; that younger generations are suffering while they cruise into the sunset on the profits of successive housing booms, their steamer chairs cushioned by generous final-salary pension schemes.
It's true that some older people are very comfortably off, thank you.
Others are in no fit state to go cruising. Or even to walk to the corner shop alone. Hundreds of thousands of them need round-the-clock care to ensure that they don't harm themselves in a fit of independence - like trying to make themselves a fried egg on toast (having forgotten that they had lunch half an hour ago).
If our cruisers overindulge themselves at the captain's table to the extent that they become obese and develop type 2 diabetes or have a heart attack, they will be looked after by the rest of society, through the NHS. Likewise if they smoke too many after-dinner cigars and develop lung cancer. Never mind that they were given clear and frequent warnings of the consequences of their lifestyle, they will be looked after and they won't have to pay.
Not so the chap who might set fire to himself frying an egg, the chap who might end up on a bus to the next town without the fare instead of 200 yards down the road at the paper shop. It's not his fault that he's ill. He did nothing to bring on his condition, there were no steps he could have taken to avoid it. But he's not "ill" ill, so he must pay to be looked after. And if he can't afford to pay now, he (or his more compos mentis relatives) should be comforted by the fact that he won't be forced out of his home - that will be his family's fate after his death, when they will be asked to settle the debts, with interest.
Just as we have come to accept that people with mental illnesses need and deserve better treatment on the NHS, we are slamming the door on people with a different disease of the brain, essentially because they can't be cured.
This is what Theresa May sees as creating a fairer society.

The Sun, May 18, 2017

If one partner in a couple living in an £850,000 house gets cancer, they will receive all the treatments and palliative care they need as they see out their days in their own home. They can then leave the property to their children free of  inheritance tax.
If one partner in a couple living in a £150,000 flat has Alzheimer's, they should also be able to see out their days in their own home. But then their offspring will have to surrender up to £50,000 to cover the care bills. At least the remaining £100,000 will be below the inheritance tax threshold. Hurrah!

The Labour party has labelled this policy, outlined in the Tory manifesto, a "dementia tax". I'd call it a vulture tax. Purists have pointed out that it isn't strictly a tax at all: the money isn't going into a pot for the common good, it is being used to pay for goods required by the person shelling out - like buying knickers at Marks and Sparks as one Financial Times commentator put it. 

Except we can choose whether to buy our knickers from M&S; we can choose to get them somewhere cheaper - or not to wear knickers at all. If you have dementia, you don't have choices about how you spend your money. You don't have choices about anything.

And, too often, nor does your family. Stretched social services departments may offer the "care" that racks up those bills to be settled after death, but in thousands of cases there will be relatives at their wits' end doing most of the heavy lifting, unpaid, giving up their own lives to look after shadows of the people they love - who may not even recognise them half the time. Relatives who have to listen to the same sentence being repeated over and over. Relatives who don't get a full night's sleep because they always have half an ear open for the wayward foot on the landing, nostrils perpetually sniffing for the dreaded whiff of smoke. Relatives who may very well also be of advancing years, possibly with health problems of their own, who could do with a bit of looking after themselves.

And if they aren't that old? Working-age daughters (rarely sons) for example? Well, Mrs May is offering them the opportunity to forsake their contact with the outside world and take a year off work (unpaid) to look after their Aged Ps, in exchange for a carer's allowance of  sixty-odd quid a week and a probably insurmountable boulder across their career path.

Looking after our elderly is a big issue for society - especially for one that is as fixated on youth as most Western democracies are - and as we see more people living into their 90s and getting their royal telegrams, it can only get bigger.
Successive governments have cut grants to local councils, who are responsible for social services, and the result has been a greater burden on the NHS as people who don't need to be in hospital for their health - having recovered after a fall, for example - are kept in because there is no one to oversee their convalescence at home. Politicians can argue til the cows come home about which budget should be used to pay for looking after people who can't look after themselves, but the fact is there isn't enough money to go round.

In the 1960s council house jam-jar economy, if there wasn't enough money in the milkman's pot, you'd raid the one for electricity. If robbing Peter to pay Paul didn't work, you'd have to try to find extra work, or economise and have another day on bread and dripping.
The same choices face the State: it can choose to spend more on Peter than Paul, it can cut back, or it can look for a new source of income. Governments (particularly Conservative ones) are terrified of taxing people, especially directly through income tax. Opinion polls may suggest that people would be willing to see the basic rate rise by a penny or two to help the health service or whatever, but no Chancellor has dared do so for a generation. Instead the rate has progressively fallen over the past 40 years from 33% when Thatcher came to power in 1979 to 20% today.
This doesn't mean taxes have fallen. Far from it. It means that Chancellors have had to become more inventive in finding ways of raising money. Rich people or big businesses might seem a good place to start. But the general public is seen as more fruitful - not least because there are more of them and there's less risk that they'll take their talent, enterprise or jobs elsewhere. So we see higher purchase taxes and new levies - such as insurance premium and flight taxes - that are not only difficult to avoid, but which also appear to be just part of the price. That way the seller or service provider, rather than the Exchequer, is seen as the villain.

The Times, May 18, 2017

So where to look when you're trying to find billions to pay for the care of old people? Mrs May is so confident of victory next month that she is willing to alienate her most reliable constituency: the grey vote. At the moment about 300,000 people who receive care in their own homes would suffer from the regime she proposes, a tiny proportion of an electorate of 45 million or so. But the whole reason action is needed now is that those few hundred thousand will become millions very soon. The arch-Conservative Bow Group, which described the proposed measure as the "biggest stealth tax in history", estimates that 70% of elderly people will require some form of care before too long.

The rules as they stand state that those with more than £23,250 in savings have to pay for their own care costs. If they are in a residential home they may have to forfeit their own property to pay the bill, but if they live in their own home, then its value is discounted.
An independent inquiry recommended in 2011 that people should contribute to their care costs, but that they should not have to pay more than a total of £35,000. David Cameron accepted the principle and agreed to introduce the policy from 2020, but with a higher cap of £72,000.
Mrs May has thrown that idea away and settled instead for a "floor" rather than a ceiling. Your last £100,000 will be protected - more than four times as much as before - but that sum includes the value of your home, even if you are living in it.

With the most modest properties in most parts of the country being valued at more that £200,000 and most at much more, it is perhaps unsurprising that a government might want to tap into that wealth. But it won't be the only one. With such a vast equity pot there for the grabbing, the sharks will soon be circling. Councils struggling to recruit care workers won't suddenly find a new pool of staff, but you can bet that agencies will spring up to offer their "services" at suitably high rates (most of which won't be passed on to the people actually doing the job). Insurers will start marketing care policies full of caveats, exclusions and get-out clauses at extortionate premiums. And what about equity release schemes? Will they die the death or flourish as canny oldsters mortgage themselves to the hilt and hand the proceeds to the kids in the hope that they'll do the right thing by their parents, having denied the state its share?

We can be certain that the rich will find ways to protect their children's inheritance - they always do - while unscrupulous financial service providers can be relied upon to dream up new schemes to take money from the less well-off and the less savvy. May's intention may be to protect the less well-off, but it will be those who were encouraged to buy their council houses so that "wealth" could "trickle down" through the generations who will end up paying. Indeed, this scheme could well ensure that the "wealth" trickles nowhere but into the pockets of bankers and businessmen.
And just as the cap on tuition fees led to virtually every university charging the maximum, so this huge pot of gold will lead to higher charges rather than any improvement in the care provided.

There will also be individual tales of woe. Under the present regime, a family can't be required to sell their home to pay care fees if there is someone under 18 or over 60 living there. The Conservative manifesto now says only that the home is safe while the person being cared for or their partner is in residence.
There are many instances of people in their 80s being looked after by relatives in their 50s or 60s. What happens to them when the house has to be sold? Will they suddenly be rendered homeless with a share of £100,000 (they may have siblings wanting their cut) to put a roof over their heads when they are too old to get a mortgage? Listen to this disabled woman in tears of worry in a call to Nick Ferrari's radio show this week.
There will be many such cases. This isn't an attack on "wealthy pensioners" but on whole families. As Mrs May says, the old people won't lose their homes. Middle-aged people who have spent years caring, unpaid, for their parents - as "dutiful" children should - will.

And what of uncaring relatives? People can do nasty things when large sums of money are at stake. It sounds melodramatic, but it's not hard to imagine bullying, violence and even the misemployment of pillows as expectant and exasperated offspring watch their inheritance vanish in a haze of incontinence pads and warmed-up lunches.
Then there's the other side of that coin: the increased risk of suicide among people who fear becoming a burden on their loved ones without the possibility of being able to pass on the family home as a "thank you" from the grave.

Come on! If you've got the money, you should pay your way. There are millions out there who don't have £100,000. Yes, but there are millions more who do have that sort of money tied up in property. Quite ordinary people who don't earn very much. People with adult children still living at home because  depressed wages, zero-hours contracts and the fierce competition for jobs mean they can't afford to get on the housing ladder. People who see, rightly or wrongly, their homes as the legacy that will allow their children finally to make a start on their lives in their thirties. They may be healthy now, but they will worry. And if they are astute, they will find ways to beat this scheme. The golden goose will lay few eggs.

Then other ways will need to be found to finance the care required. If dementia isn't a "proper" illness to be treated via the state, maybe people with other conditions associated with old age will be told that they, too, must cough up. Like a washing machine guarantee, "normal wear and tear" could be excluded: A new hip,  knee replacement, cataracts? You're old, it's only to be expected. If you have the means to pay, you must. Of course many already do by choice, but we're entering the realms of  buying our healthcare on the never-never and it is the very future generations Mrs May is trying to be "fair" to that will have to foot the bill.

The strangest thing about this whole policy is the fact that a much gentler version that would have spread the burden far wider was put forward in 2010 by Labour's Andy Burnham. His idea was a 10% levy on people's estates, on top of inheritance tax, to pay for social care. The policy was rejected by his own party as a vote loser - but still used as propaganda by the Tories, who produced a gravestone poster to hammer Gordon Brown.
Burnham nevertheless returned to the idea in subsequent years, suggesting that the tax could be as much as 15%. That would mean that someone with a £500,000 house would have to pay up to £75,000 towards a general care fund. If that policy were introduced today, the total bill for a single person's estate, including inheritance tax, would be a maximum of £145,000. Under the May plan, the maximum would be £400,000.
Right-leaning newspapers, which are constantly carping about levels of inheritance tax, hooted with derision at the Burnham plan. Here's the Daily Mail leader from March 11, 2010:

What is so grotesquely unfair is that, once again, people who have worked hard will be the ones who suffer, while those who have spent a lifetime on benefits and have not saved to buy their own home, will pay nothing....Of course, there are no pain-free solutions to the enormously-costly problem of providing dignified care for the elderly. But why on earth taxes like National Insurance cannot cover it is another matter altogether.
Once again it is hard to avoid the conclusion that while the poor and the very rich will avoid (or find ways of not paying) this tax, Britain's hard-pressed middle-earners will be made to pick up the bill

This week they have almost all accepted the May scheme as sensible. Here's the Mail leader yesterday:

With a clear ethical - even Christian - tone, this vicar's daughter took the riskier option: to be unremittingly honest with the public about the great challenges this country faces, to spell out how she intends to confront them and to promise only what she can deliver....
Nowhere is her approach clearer than with the issue, shamefully dodged by her predecessors, of social care for our elderly.
Yes, homeowners will see assets they have built up over years whittled away by care costs. But the system will at least be made fairer: no one will lose their homes, and no family's nest egg will fall below £100,000.
Times change, needs must. But would they have been so sanguine had the idea come from Jeremy Corbyn?
And is it really fair? If we can all chip in to educate our children, to defend ourselves, to police our streets, is it too much for us all to chip in to look after our old people? As the Mail asked seven years ago: why on earth can't taxes cover the cost? It doesn't have to be income tax or national insurance - though it could be. It could be a wealth tax, a property tax, an inheritance tax. But why should those unlucky enough to need this particular sort of care be the only members of society that society won't look after?

The Express, Mail, Telegraph and Sun - all rooting for May - didn't trouble to explore alternative options, but instead  emphasised the promise that people wouldn't be forced to sell their homes during their lifetime and the quadrupling of the amount of savings they'd be allowed to keep.
The Mail, to its credit, ran a Q&A spelling out who would be worse off on the day the story broke (the day before the manifesto was published) and a full page of criticism on the day after. The Sun also carried a spread asking if this were an "Alz tax". The Express and Telegraph offered no detailed explanations and scant reporting of the objections - which were many, including, as mentioned earlier, from the Tories' own Bow Group.

Sir Andrew Dilmot - who conducted the review commissioned by Cameron - was withering, saying the proposal showed a "less than full understanding" of the problems. People would be left helpless and alone with no control and no means of protecting themselves against care costs. Jan Shortt of the National Pensioners Convention described it as a Frankenstein's monster of a plan that  bolted lots of bad policies together.
Ms Shortt, as you'd expect from someone in her position, went on to note the means-testing of the winter fuel allowance and the end of the "triple-lock" pension guarantee - both of which will be far more palatable for most people than the care policy.

The Express - for whom pensions and Alzheimer's are go-to splash topics - might have been expected to balk at the proposals. But now that there is no prospect of Nigel Farage ever running the country, nothing must be allowed to stand in the way of May's re-election. While the Sun and the Mail have both felt emboldened by the prospect of a landslide to question various Tory policies, the Express has simply skirted uncomfortable issues. It declined, for example, to report Corbyn's plans to end hospital car parking charges - even though it had run a "crusade" against them itself.
Its first report on the means-testing of the fuel allowance said that "all but the least well-off" would lose the payment. Within a day that had become "the wealthiest pensioners will lose". The social care initiative was fanfared on Thursday as "May's plan for a fairer Britain" and the follow-up the next day was a single-column story headlined "PM blasts critics..." Everything must be given the best possible gloss.

The paper may like to protect its readers from unpalatable truths, but the people running it cannot be unaware of the impact these policies will have. And so, this morning, it produced possibly the most cynical front page of the campaign so far - and with the Mail leading that competition, that's quite an achievement. Its main headline: "Alzheimer's cure hope".
Some German researchers have looked at a protein associated with Alzheimer's in a test-tube. They don't know yet know if what happened in that test-tube replicates what happens in the brain.
The journey from initial research of this kind through to developing treatments and the outside possibility that they will produce a cure is a thousand miles long. That headline was irresponsible. But was it more than that? Was the Express being cynical or am I? For I suspect that when execs realised what that manifesto pledge meant - forget your worries about inheritance tax, if you have dementia, we'll bleed your children nearly dry - the order went out for the health reporters to "find" an advance in Alzheimer's research.
And lurking in the turn was a panel headlined "One in three stroke patients fall victim to dementia", which simply served to emphasise how big the problem is going to become and how many more people are going to be affected.
If the Express is right about what its readers care about, then it should in turn care enough about them to examine issues thoroughly and honestly instead of telling them half the story and "reassuring" them with quarter-baked science reporting.