Tory plan to let old insure for care costs

Government courts middle classes forced to sell homes to pay for help

The Government's promise of a "new deal" for the elderly, which would let them keep their homes if they need long- term residential care, was attacked as an "election fig leaf" by charities and health bodies.

Labour is almost certain to cancel the plan in which people would take out insurance for the cost of residential care, claiming it would only help those who could afford premiums.

The plans were seen as an election gamble by Health Secretary Stephen Dorrell to outflank Labour in the election, over an issue which has caused outrage among middle class voters who have been forced to sell their homes to pay for long-term care in old age.

Chris Smith, Labour's health spokesman, said an incoming Labour government would establish a Royal Commission to carry out a full review of the care system and it would introduce a long-term care charter setting out entitlements.

Labour would introduce a national charging policy for domiciliary care so that people knew what capital and income was going to be taken into account.

Under the Government's proposals, those taking out insurance policies will be allowed to keep pounds 1.50 in assets for every pounds 1 worth of insurance, before losing state aid for their long-term care.

The Health Secretary, publishing the draft Bill to establish the scheme, said it would rectify an "injustice" in the present system which is currently worth pounds 1bn a year. It is expected that he will announce tomorrow that local authorities will be forced to sell off remaining care homes and use private or voluntary groups to provide those services.

At present, those who need long-term care have the first pounds 10,000 worth of their assets disregarded, so those with less than that amount have their care needs met in full by the state.

Those with assets of between pounds 10,000 and pounds 16,000 are means tested but those with more than that have to meet the cost in full, with the result that thousands are forced to sell their homes each year.

Under the new proposals, the state will disregard pounds 1.50 worth of assets for every pounds 1 worth of private insurance bought. So, for example, if your house is worth pounds 60,000, the first pounds 10,000 is disregarded and you then have to buy pounds 33,300 worth of cover to bring you up to the pounds 50,000 you need to protect your house.

The premium can be taken out at retirement age, or before and can be paid in a lump sum or in instalments. Figures put out by the Department of Health suggest that for someone protecting pounds 60,000 worth of assets a lump sum premium would be pounds 5,400 for a man and pounds 8,100 for a woman.

Once the cover has been exhausted - residential and nursing care costs between pounds 200 and pounds 350 a week - the local authority will have to cover your care in future and will not be able to seize your home.

According to the department, 18 per cent of men and 36 per cent of women aged 65 run the risk of admission to a residential home. A quarter of people currently pay the full cost and the Department of Health estimates that between 20 and 50 per cent of self-funders will take up the scheme.

But Sally Greengross, director general of Age Concern, warned against "scaremongering" when it comes to the future of paying for care. She said only around one in 20 older people are currently in long-term care.

"In order to have an insurance policy to protect assets, you need a good income and an asset worth protecting. It will only affect a minority," she said.

Ms Greengross was joined by the Continuing Care Conference (CCC), a group of commercial and charitable org- anisations calling for the state to disregard pounds 2 worth of assets for every pounds 1 worth of private insurance bought. "This would benefit a far greater number of people and would also make it possible for people with slender resources to protect their assets," said a CCC spokesman.

The NHS Support Federation condemned the scheme, saying in practice the proposals would only cover houses worth less than pounds 60,000.

"This scheme is nothing but a fig leaf for the election," said Michael Walker, its director.

"The Government cannot even guarantee that the present level of 40,000 people losing their homes to pay for care will fall."

A spokesman for the Association of British Insurers said: "We are not there to provide a safety net. That has always got to be the role of government."

Leading article, page 13