Joan Smith: Great expectations for many, hard times for the old

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A "death tax" sounds shocking: a cruel imposition on bereaved families who have enough to think about without having to hand over thousands of pounds to an unfeeling government. The phrase resurfaced last week, a month after the Tories' controversial poster – and Tory-supporting editors know that it strikes middle-class voters where it hurts: in their fantasy about every Briton's right to a substantial, property-based inheritance.

Condemning the house-price bubble which contributed to the dire state of the British economy is one thing. Asking the public to give up even a modest proportion of the wealth accumulated by their parents is another. There is something inherently ridiculous about the way in which rising property values hold out the prospect of a substantial windfall to relatives who've contributed nothing to it themselves. Many middle-class people who already own their own homes are looking forward to an inheritance of several hundred thousand pounds – the first £325,000 is tax-free – when a surviving parent dies.

It's almost as if the money is already theirs and the idea that 10 per cent, say, should be paid as a levy to fund social care for the elderly causes spluttering outrage in some quarters. The Conservative Party regards the proposal as such an assault on inalienable property rights that it is refusing even to talk to government ministers while any form of compulsory levy is on the agenda. Yet it's hard to see how its own really rather feeble plan for a voluntary insurance scheme could possibly fill the £6bn black hole caused by the physical needs of an ever-larger ageing population. No one wants their parents or grandparents to suffer, but they'd rather the state paid for social care; elderly people are entitled to it, surely, after paying income tax and national insurance throughout their working lives?

Increased longevity has created financial demands on the state which it did not foresee and cannot cope with. In 1889, when Bismarck introduced the first social insurance scheme, the retirement age was set at 70. During the previous decade, life expectancy at birth had been 35.6 years for German men and 38.4 for women; some of that is accounted for by high infant mortality, but by the first decade of the 21st century it had increased to 75.9 years for men and 81.5 for women. In this country, the retirement age is set to rise gradually for both sexes, but it's still on the low side for healthy people, leaving them dependent on pensions or state benefits for two or three decades while their chief, and not easily realised, asset is property. (And not everyone wants to give up work completely in their sixties, which means that the current system suits no one.)

It's a mess, no matter how much the Tories pretend there are less drastic solutions. Labour hasn't suddenly reverted to it socialist roots under the current secretary of State for Health, Andy Burnham, but ministers are trying to come up with a fair scheme that removes some of the worst anxieties of old age, such as the fear of losing your home. Almost 50,000 elderly people in England and Wales have already had to sell their homes to pay for residential care.

"Don't vote for Labour's new death tax," the Tories warned. A less emotive description of the proposal is a deferred insurance payment guaranteeing social care for all who need it. It also means challenging middle-class dreams of inherited wealth. Does any party have the guts to do that with a general election looming?