Long-term care may go private

Private insurance plans to help people with long-term care when they are elderly will be announced next week by Stephen Dorrell, the Health Secretary. The pledge to introduce the scheme is intended to defuse a row with Tory supporters forced to sell their homes to qualify for means- tested state benefits for long-term care for the elderly.

The Government delayed introduction of the pension scheme after resistance from the insurance industry, but Mr Dorrell is expected to announce backing for a scheme which will deliver pounds 1.50 of cover for every pounds 1 invested. With pounds 16,000 in assets already disregarded under the rules, it could allow a 65-year-old to buy cover worth pounds 34,000 for a single payment of pounds 5,000 or pounds 50 a month. It is the second boost to the insurance industry after the announcement this week of the Government's plan to switch all state pensions to private insurance schemes.

The Government was accused of "privatising" state pensions by Labour leaders who said there was mistrust of private pension schemes following mis-selling in the 1980s, when thousands of nurses, teachers, policemen and firefighters were persuaded to leave public-sector pension schemes for more expensive private insurance funds.

To answer that criticism, Sir Andrew Large, head of the Securities and Investments Board, was summoned by Angela Knight, a Treasury minister, to be told to end "foot-dragging" over payment of compensation to those wrongly advised to take out private pensions in the 1980s.

Only 25,000 of the 500,000 "most urgent" cases identified since 1994 have been completed and pounds 50m offered in compensation. The Government fears the failure to make faster progress on compensation will undermine its Basic Pensions Plus proposals unveiled by Peter Lilley, Social Security Secretary, and John Major.

"Targets will be set to ensure people are put right. Sir Andrew ... demands huge progress in 1997. I will settle for nothing less," said Mrs Knight.

Sir Andrew has been given three weeks to conclude meetings with the companies mainly involved to allow Mr Major to go into the election campaign with a "good-news" message for the compensation claimants.