If you want to pass on anything of value to your children, you have to make sure you leave this life before you get too sick or old.
That is the ghastly situation that Scotland’s senior generation faces at the moment. It’s nothing to do with those nasty Tories, this is a heartless scandal that is made entirely in Scotland.
The much vaunted ‘free care for the elderly’ is very much a misnomer as requiring such care can suck you of your home and your savings in less than a year. The rules include the following:
“Those with personal capital assessable assets (and ½ of any jointly held assessable assets) exceeding only £24,750 (2012/13) have to pay for all of their accommodation costs.”
It is suspiciously difficult to find any information on how much accommodation costs at a care home in the UK, let alone Scotland, but Partnership suggests the following:
“On average an individual can expect to pay around £27,144 a year for a residential care home, rising to over £38,000 if nursing is required. “ The weekly figure quoted for Scotland was £566/week, or £29,432/year, which is already above the £24,750 cut-off for having to pay your own way. Kiss goodbye to the fruits of your hard-earned labour if you can’t look after yourself.
Basically, as I understand it, even if you had a mere £100,000 capital locked up in a family home, you would have to liquidate that asset to pay for the first three or four years of your care before the Government would provide the much vaunted ‘free’ element that it is so keen to boast of on its glossy pamphlets.
More worrying is the apparent creeping privatisation that is still percolating through the system, seemingly unchecked. So not only are older people handing over their savings and selling their homes to pay for their own care, but part of their money is going into the profits of big business that often, too often, can’t meet basic standards. It can’t be right. The issues around Southern Cross and Elsie Inglis are two of many examples where private care for what should be a public provision just doesn’t work.
At a sprightly early 30s, I’m far from being an expert on the issue, but the more I read about what lies ahead for Scotland’s elderly, the more I realise that we are so far away from having a truly civilised society that we might as well start again from a blank sheet of paper. Rather than decide what level of tax we want to pay and work how far it goes, why has no political party worked out what costs are required to run a modern, compassionate, cradle-to-grave nation and then adjusted the tax levels accordingly?
Teaching our children to a satisfactory standard cost x, ensuring a decent minimum level of health standards (including looking after our elderly) costs y and policing our numbers to a degree where we all feel reasonably safe costs z. Add everything up and spread that necessary income across the taxes accordingly. The obvious explanation for this not having taken place is that the result would be tax rises and the political party who proposed them at the next election would get unjustly stuffed. Witness the Scottish Greens last year who failed to take advantage of a Lib Dem implosion, no doubt due to their argument that relatively minuscule tax rises were unavoidable.
Sweden gets it, of course. A VAT rate of 25% vs ours of 20%, an income tax rate of 48% vs ours of 40%, a Corporation Tax rate of 26% vs ours of 24% (23% from 2014). Sweden benefits from a state monopoly on booze, a law against people owning second homes, shared parental leave, generous social security and a health service every bit as effective as the NHS but at about a quarter of the price. The result? A balanced, prosperous, healthy, civilised society that can afford, amongst other things, genuine free care for the elderly.
Suggest to a Swede that one needs to sell their home to be looked after by the state and be prepared to be embarrassed by their stupefied reaction.
If the numbers in Scotland don’t add up, then the numbers don’t add up and we just have to try something else. We surely can’t continue to asset strip the elderly in order to make Scotland’s ends meet.
#1 by EyeEdinburgh on August 15, 2012 - 8:21 am
Witness the Scottish Greens last year who failed to take advantage of a Lib Dem implosion, no doubt due to their argument that relatively minuscule tax rises were unavoidable.
Or because they didn’t provide constituency candidates for people to vote for. A party can’t take advantage of another party imploding unless they’ve got candidates standing for election, which the Scottish Greens didn’t.
#2 by Jeff on August 15, 2012 - 11:22 am
True, that was disappointing.
#3 by EyeEdinburgh on August 15, 2012 - 8:28 am
Sorry, that was a sidetrack.
One of the key problems with providing care is that the people who do the care work, while frequently loaded with praise when they do it well, are paid at close to minimum wage or less.
Anyone who works in care will have a catalogue of the various ways in which their employers exploit them – not paying for travel time between clients, a flat fee for overnight work instead of an hourly rate, cutting paid sick leave to discourage employees from taking a day off when they first feel ill.
Employers get away with this because care work is not regarded as skilled or valuable: because the people who are being cared for usually don’t have a means or the resources to complain about any shortcomings.
There’s no use putting taxes up to invest more money in care unless the money gets invested at the front line – and the track record of what will get spent where is not good.
#4 by Indy on August 15, 2012 - 9:03 am
You misunderstand what free personal and nursing care is. It never included free accommodation – no-one ever suggested it could. And it can’t.
What free personal and nursing care does – and it is absolutely essential – is to allow more people to remain in their own homes for longer. So they don’t have to go into residential care until it is absolutely necessary. That is what people want and it also costs less. So it’s a good policy and must be maintained.
You mentioned Sweden – that country has one of the lowest rates of residential care for elderly people in the world and that is what we are aiming for as well. The idea that as soon as people become a bit frail they need to be packed off into a care home belongs in the 1970s.
#5 by Alasdair Stirling on August 15, 2012 - 10:23 am
Jeff: I am surprised that someone, ostensibly so keen on taxation, should have such a problem the state requiring those able to pay for their accommodation costs. Granted, on first glance, the policy looks rather crude, but on closer examination it is actually a very effective tax. It attaches only to those who can afford to pay, it hypothecates directly to the services that it purporters to fund and is only charged at the point of the consumption of the services. Clearly, it is not hard to see why self-interest makes many people dislike this arrangement, but I have difficulty understanding why there should be any principled objections. Moreover, I cannot see any good reason why those sons and daughters who, in time honoured tradition, undertake the personal care of their parents should have to pay extra tax just so that those who cannot or will not look after their elderly relatives can benefit from substantial inherited wealth.
#6 by Jeff on August 15, 2012 - 1:20 pm
I simply don’t see why residential costs shouldn’t be part of the overall packages. I get that isn’t part of ‘this’ package, but that is what I’m objecting to.
There are children whose parents can afford private tuition but I’d rather they went to state schools, there are patients who could afford BUPA but I’d rather they opted for the NHS. Same for free care for the elderly; if a person, any person, reaches a stage in their life where they can’t look after themselves or be looked after in their own home, I want to live in a country where the state looks after them no questions asked.
I appreciate it’s difficult to get our heads around in the UK where we have Tories in charge and policies, past, present and future, that fall way short of this ambition but, as I said in the post, Sweden pulls it off relatively easily.
A significant increase in inheritance tax to pay directly for increased standards and provision of care would be a decent start.
#7 by Doug Daniel on August 15, 2012 - 2:30 pm
“A significant increase in inheritance tax to pay directly for increased standards and provision of care would be a decent start.”
Doesn’t this basically reach the same result? Whether the money comes from inheritance tax or residential care home fees, the end result is less inheritance to pass on to the children. The difference is, those who can’t be bothered taking care of their own parents end up getting little inheritance, because their inheritance has been frittered away on care homes, whereas someone who takes an active role in looking after their elderly parents ends up being rewarded for doing so by not having their inheritance spent on care homes.
That’s a very simplistic way of looking at it, mind. Of course, you could argue that the very act of passing down an inheritance is one of the things that keeps the rich and the poor where they are, as the rich pass their wealth down the generations, while the poor have little or none to pass on…
(Incidentally, I don’t know if this makes any difference to your arguments, but Sweden abolished inheritance tax completely in 2005!)
#8 by Indy on August 15, 2012 - 4:34 pm
I don’t understand that logic. You are essentially saying that when people become old they should no longer have any housing or living costs.
If people go into residential care, it becomes their home. It’s not like being in hospital. It is where they live. It’s their permanent residence.
“Free care” means “free care”. (Well it actually means free personal and nursing care) It doesn’t mean free housing.
It is nothing to do with the Tories. The 1999 Royal Commission on Long-Term Care for the Elderly said that “the costs of long-term care should be split between living costs, housing costs and personal care. Personal care should be available after assessment, according to need and paid for from general taxation: the rest should be subject to a co-payment according to means.”
Scotland is the only part of the UK that has actually done that. But care home residents continue to pay towards their living costs if they can afford that – as they would be continuing to pay for living costs if they were not in a care home.
There are issues around the charges levied and the quality of service delivered, undoubtably, but it is just not as black and white as you suggest.
#9 by Alasdair Stirling on August 15, 2012 - 4:34 pm
Jeff: I think that you have a very rosy view of taxation and its effects. I well remember when tax was levied at 19/6 in in the Pound (that’s 97½p for those of you who don’t remember real money). The net effect was that there was wholesale tax evasion and avoidance. Rod the Rockstar simply left for America, Matt the Manager and Eddie the Entrepreneur retired to the golf course and Joe the Joiner moved to the black economy. The harsh fact is that, by the late 1970s, nobody was willing to pay the tax necessary to fund the Labour government’s social programmes. I am no great supporter of Margret Thatcher, but there is no doubt that her prolonged success was due (in no small part) to the fact that Britain had tested Labour’s high tax high spend policies to destruction and discovered beyond any shadow of a doubt that they were an absolute failure. To be a success, an independent Scotland needs a much much more creative approach to tax policy than is dreamt of by those too young to have felt the state’s rapacious hand in their pocket.
#10 by Euan on August 15, 2012 - 3:06 pm
It’s ghastly that residential care sucks up anything of value that you might want to pass on to your children yet your solution is suck up anything of value through an inheritance tax?
The State always has to ask questions. You cannot ignore the fundemental economic problem of scarce resources – everything has an opportunity cost.
You could spend billions on a fabulous health system – though it would still not be perfect as resources are finite – at the cost of spending less on Education. The issue becomes ever more acute at the margins as you increase resources; there comes a point where the marginal returns are outweighed by the margin costs. You could a vast amount on extending the life of a handful of individuals for a few months but that same amount in Education could make a far larger difference to many more people.
So everything the State does is a choice and thus the State must always ask the question: is this the best allocation of scarce resources? This applies even to tax – the State has to ask itself would this marginal tax be better left in the economy?
But not everyone will always agree with that allocation – we are all individuals with needs and wants that differ from the population as a whole. That is why in a free country private health, education and residential care will always exist – because some individuals will choose to devote a higher allocation of their resources, over and above the tax they’ve contributed to the State, to a particular activity than the State will, especially activities on the margins.
There is a limit to what the State can do – at some point it has to compromise on healthcare because it needs resources in education. Now if you happen to be after that point, why shouldn’t you be able to choose to spend less on tobacco or alcohol or going to the football or any of the infinite wants that others choose to allocate their resources to, and more on what matters to you? You can’t reply that the State should meet the burden because the State has already decided it has higher priorities (in other words more good can be done in other areas) for its scarce resources.
The alternative is not a free country.
Sorry to give you an economics lesson Jeff but the approach you take of deciding you need or, more properly, want the State to provide X+Y+Z smacks of the consumerism “I want this now” generation that runs up huge credit card debts because they’re unwilling or unable to appreciate that we can’t have everything. Likewise you can’t decide that we will take as much tax (or even borrow) as required to fulfil our wants, because even tax has an opportunity cost. Life isn’t as simple as that.
#11 by Nikostratos on August 15, 2012 - 3:28 pm
a mere £100.000 my you must me living in the higher strata of society.
Whats more important that an elderly person should have care or there grasping Children you should get the nest egg at the end of their elderly parents life??? .
Many no most will not look after their parents and would like someone else to pay for the privilege.
perhaps we should recognise a house is to live in and not an investment to hopefully pass on to our family’s
#12 by peter on August 15, 2012 - 5:46 pm
or sign yer home over to someone else
#13 by Don Francisco on August 15, 2012 - 7:43 pm
My family is experiencing precisely this with a elderly relative (my Gran) at the moment. They did let her live in the same home as them for a number of years, but she now needs around the clock care. We’ve done the maths, and to put her in a half decent home will whittle her savings down to the £24k or so in little over four years.
Obviously care does need paid somehow, but I’m not sure the way it is paid for now is necessarily the best way. If the system remains the same when I get old and infirm, I’dpass as much of it to my children as I could. Or hope for a quick death.
#14 by FormerChampagneSocialist on August 15, 2012 - 10:38 pm
Jeff
It’s pretty easy to make sure that an elderly person doesn’t have any assets and thus qualifies for residential care. Any decent private client lawyer can help you plan this when the time comes. Not for a while, in your case.
Anyway, your piece basically boils down to a (fairly tired) rant against means-testing. Well, I am absolutely in favour of means-testing, for everything. Why on earth should the taxpayer pay out to people who don’t need the help? If you can pay to look after yourself, then you should. I fail to see why I am paying taxes to fund winter fuel, bus travel, prescriptions, personal care etc. for those who can afford these things themselves.
By the way, the top rate of income tax is 50%, for the moment at least….
#15 by Stuart Dickson on August 17, 2012 - 3:06 pm
– “Sweden benefits from… a law against people owning second homes…”
Huh? As someone who until recently owned a second home in Sweden (we sold it when our 3rd child rather unexpectedly popped along and changed our life focus), I am fascinated to know what on earth your source is for this? Second home ownership (and boat and horse ownership) is extremely common in Sweden, with many people (even in the rented and housing association sectors) actually owning a wee “summer house” in the countryside or at the coast. It is pretty much a national movement in its own right, and deeply embedded throughout most strata of Swedish society.
Are you perhaps referring to the Danish ban on non-Danes (ie. Germans) owning summer cottages there?
By the way, I suggest you also do your homework on the Swedish health service. A trip to the GP costs at least 100 SEK (just over £9) per appointment, a hospital consultant consultation costs 300 SEK per appointment, you pay for food/electricity during hospital stays, and prescribed medicines cost a fortune. And car parking at the hospital costs an arm and a leg too. Mind you, they did do a wonderful job of curing my cancer a few years ago, so I will not hear a word said against them.
(By the way Jeff, lovely to see you still blogging. It is years since I browsed any Scottish political blogs, and it is nice to rediscover some old favourites!)