Government promises free care and support for the elderly – but fails to explain how the commitment will be paid for

Social care plans have been branded a "train crash" after the Government said that long-awaited reforms to the care of the elderly would be delayed for at least five years.

The Department of Health announced plans to create an NHS-style national care service yesterday, funded by compulsory payments, which would eventually provide free care and support for the elderly.

Gordon Brown described the plans as a "bold and ambitious" reform of services for the elderly which would ensure that everyone has "dignity and security" in their old age.

Andy Burnham, the Health Secretary, said the move would represent the biggest shake-up in the welfare state since the creation of the NHS in 1948.

Mr Burnham unveiled plans for an NHS-style national care service "free at the point of use" and funded by compulsory payments. But he declined to decide how it would be funded and instead announced the creation of a new commission and a delay of up to five years, with the new system now not coming until at least 2015, in the Parliament after next.

After a political row in which Labour faced accusations of promoting a "death tax", Mr Burnham pledged to set up a commission to recommend how compulsory payments should be levied.

The Health Secretary confirmed that so-called "death tax" of 10 per cent on the estates of the elderly would still be under consideration despite being apparently ruled out by Chancellor Alistair Darling.

Opposition parties accused the Government of dodging the need for urgent action amid ongoing political arguments over how long-term care will be funded. The White Paper commits the Government to creating a "comprehensive" service "based in need rather than the ability to pay". It also pledges to provide free residential care for all those who have already been in a care home for two years by 2014. This follows legislation currently being debated to allow the most needy to be cared for at home without charges.

The Conservatives, who propose a voluntary £8,000 one-off premium at 65 to guarantee free care, ridiculed the plans. Andrew Lansley, the Conservative health spokesman, said: "The Government is in complete retreat and they have ended up with not a White Paper but frankly a train crash. We seem to have arrived at the point where Andy Burnham is saying he wants everyone to have free care but doesn't know how to pay for it."

The Liberal Democrats were initially supportive of free personal care – as has already been introduced in Scotland – but now want a "partnership" where the state pays some and individuals top this up. Lib Dem health spokesman, Norman Lamb, said: "After 13 years in power spent ducking social care reform, we shouldn't be surprised that Labour has once again hit it into the long grass."

The current system of funding social care is widely regarded as unfair and is facing increasing demands from an ageing population and rising costs.

Adult social care is currently means-tested and everyone with savings of over £23,000 pays for any help they need. Thousands of people have been forced to sell family homes to pay for residential care because of this threshold, which includes the value of their property.

The Government had been examining different options for funding social care provision. In all three options, the state would provide a basic level of funding, which would be topped up by individuals either paying into an insurance scheme, a compulsory fee or personal contributions. But it will now be up to the new cross-party commission to decide which option will be adopted.

The first-year cost of the full free care service in the Parliament after next would be £3.6bn, Mr Burnham said.

Campaigners and researchers called for an earlier decision on funding the new system.

Timeline: 13 years of delay

September 1997 Tony Blair tells the Labour conference: "I don't want [our children] brought up in a country where the only way pensioners can get long-term care is by selling their home".

December 1997 Government convenes a Royal Commission to consider reform of long-term care.

March 1999 Royal Commission recommends that all long-term personal care should be provided free.

May 1999 Health Select Committee report warns "failure by Government to act urgently would be a serious dereliction of duty".

January 2000 Government rejects the Royal Commission's proposal. (It was adopted by the devolved Scottish administration, beginning in 2002).

March 2006 The King's Fund publishes a report by Sir Derek Wanless recommending a "partnership" model involving a guaranteed minimum level of state funding for all.

April 2006 A Joseph Rowntree Foundation (JRF) publication which concludes that the present system is underfunded, incoherent and unfair.

December 2006 The Government's Pre-Budget Report says funding reform will be considered in the 2007 Comprehensive Spending Review.

October 2007 The Pre-Budget Report finally gives a commitment to reform social care funding.

July 2009 The long anticipated Green Paper, "Shaping the Future of Care Together", is published.