A senior Tory MP has condemned plans for a new “care Isa” to fund end of life treatment, arguing that it would only work for a “small minority of wealthy people” who can afford to invest.
But Sarah Wollaston, the chair of Commons Health and Social Care Committee, has said the plans were a “colossal mistake” and she claims that they would not solve the crisis “at all”.
The proposed Isa, revealed in the Sunday Telegraph, would be capped to reflect care costs and any unspent money would be passed on to the holder’s family when they die without being taxed.
It is understood that the Treasury has been reviewing proposals to include the new Isa in the social care green paper due to be announced by the government.
At present, Isas are currently taxed when the holder dies – which is said to give people a “perverse incentive” to spend money they may need for end of life care.
But Dr Wollaston, who is chair of the influential committee of MPs, was quick to reject the idea.
On Twitter, the Tory MP for Totnes wrote: “This won’t solve the care crisis at all. There is no pooling of risk.
“It only ‘solves’ it for a small minority of wealthy people who can afford to invest and whose families benefit from paying lower tax on their inheritance if not used for care.”
She added: “Abandoning the centre ground & the will to tackle inequality is a colossal mistake.”
According to the Telegraph, more than 4.3m people over 70 have an average of £40,000 in Isa wealth. Meanwhile more than 12 million over-50s have saved tens of thousands of pounds in Isas.
Baroness Altmann, the Conservative peer and former pensions minister who gathered the figures, told the paper that the money could “usefully contribute towards their future care needs, unless they have spent it all by the time they reach later life”.
She said: “If you haven’t spent your Isas before you pass away, the money will go into your estate and could be taxed at potentially 40 per cent, so if you have large sums in Isas, there is the perverse incentive to spend them before you die.”
A Department of Health and Social Care spokesman said: “Our green paper due in the autumn will set out our plans to reform the social care system to ensure it’s sustainable for the future.
“In developing the green paper we are looking at how we can support people with the costs of their care in a way that is fair to all generations.”
Additional reporting by PA
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