Fears are mounting that the estates of hundreds of thousands of pensioners who would not have faced inheritance tax will be hit with new levy
Andy Burnham could face a major backlash if more estates are taxed (Image: POOL/AFP via Getty Images)
Andy Burnham has been warned not to “hammer” families with a new “death tax” as he prepares to unveil plans this week to tackle Britain’s social care crisis. The Conservatives claim the Government has made “made more than £50billion of unfunded pledges” and new Chancellor John Healey is facing calls to rule out hiking taxes in the Autumn Budget. He is under pressure to “come clean” on how Mr Burnham’s spending commitments will be paid for.
Conservative leader Kemi Badenoch has warned that making unfunded spending commitments risks repeating the turmoil which doomed Liz Truss’s premiership.
Mr Burnham has declared his ambition to “fix” social care but universal provision could cost more than £18billion a year. He suggested in May that a “care levy” could be introduced – but he can expect fierce opposition if this means many people who would not have faced inheritance tax will have their estates taxed. Fewer than 5% of deaths resulted in an inheritance tax charge in 2022-23, and Reform UK’s Robert Jenrick warned against dragging “650,000 hard-working pensioners into paying a death tax each year”.
He said: “Everyone wants to fix social care, but an £18billion death tax is emphatically not the answer. People are already reeling from a record tax burden. If Burnham presses ahead it would be a hammer-blow for millions of people across the country. Sunday Express readers who have saved up their entire lives should not be double-taxed on their hard-earned savings. It’s simply not fair.”
Mr Jenrick said Mr Burnham has “no mandate to inflict a mammoth tax assault on the country”.
He warned: “If Andy Burnham wants to reheat his failed death tax he should call a general election and see what the British people make of it. He has no mandate to inflict a mammoth tax assault on the country.”
John O’Connell of the Taxpayers’ Alliance also voiced concern, saying: “Andy Burnham is already flirting with a vast new social care bureaucracy, but has no credible plan to pay for it beyond raiding taxpayers yet again. A national care service funded by new death taxes would punish families who have worked, saved and already paid tax all their lives. Britain needs serious social care reform, not another bottomless money pit paid for by grieving families and hard-pressed taxpayers.”
But a Number 10 source said: “Andy is going to run towards problems that have been neglected, giving people hope again. He has the courage to fix the most difficult issues that have been ignored for years and seen as impossible to resolve. He doesn’t accept that they are. They can’t be ignored any longer. The Prime Minister is determined to show that governments can make people’s lives better if they choose to. He wants to get Britain believing again.”
Robert Jenrick will serve as Chancellor if Nigel Farage becomes PM (Image: Victoria Jones/Shutterstock)
Shadow Chancellor Sir Mel Stride has written to new Chancellor Mr Healey, demanding details of how the PM’s announcements will be financed. Mr Burnham has pledged to take off VAT on home electricity bills and wants to end rough sleeping; he has committed to cap bus fares at £2 and cut business rates for pubs and clubs.
This is alongside the new PM’s ambitions to turbo-charge council housebuilding and tackle social care. Increased defence spending will be a priority for the Chancellor, who resigned as Sir Keir Starmer’s Defence Secretary over concerns about underfunding.
Sir Mel said: “Andy Burnham came into office without a plan. He has made numerous promises but seems to have little idea how he will pay for any of them. These unfunded pledges will only add to concern and speculation about yet more Labour tax rises at the next Budget, as well as yet more borrowing, leaving a crippling burden for future generations. Britain cannot afford that – and businesses and households should not be left in the dark. That’s why I’m calling on John Healey to come clean on the real cost of Burnham – and tell us who he expects to pay for it.”
A Labour spokesperson hit back, saying: “The Tories crashed the economy and left families worse off. They’ve never apologised and are still making uncosted promises today. They may have forgotten what they did, but nobody else has.”
The prime minister is expected to make further announcements this week on how he plans to get to grips with unemployment and deliver on his devolution pledges.
Mr Burnham – who has said the Government will “take decisions on tax at the Budget” – has also triggered a warning from the Resolution Foundation. It estimates that pledges made in his first days in office mean the Government’s “fiscal headroom” – the amount it can spend without breaking debt and borrowing rules – has fallen to £8billion.
Dennis Reed is a leading campaigner for older Britons (Image: Jonathan Buckmaster)
The PM is under intense pressure to deliver on his ambitions to reform social care, which date back to his time as Health Secretary under Gordon Brown, before thousands more people lose their homes.
Reports suggest a new “national care service” is unlikely to cover “daily living costs” such as food, accommodation and energy bills.
Campaign group Silver Voices called on him to axe a review into social care, led by Louise Casey, which the pressure group says is holding up urgently-needed changes. Baroness Casey, chair of the Commission on Social Care, is due to publish her full recommendations in 2028 and is to launch a pubic consultation this summer.
Silver Voices director Dennis Reed said: “[We] need action, not more warm words on social care. A bold first step would be to order Baroness Casey to scrap her ridiculously elongated timetable for the Commission and come up with recommendations and options by the end of the year, which could then be discussed with all opposition parties with a view to reaching consensus. If consensus could not be reached, Labour should legislate reforms in this Parliament.”
Last year 900,000 people had requests for social care turned down, and 40,000 older people every year are forced into selling their homes to pay for the astronomical costs of residential care
But more people will be forced to raid life savings after the Department for Health announced it was freezing the level of assets people are allowed to own before they stop receiving care for free. The lower “capital limit”, at which people make a means-tested contribution to social care, will remain at £14,250. The higher limit, when people are forced to pay for all their care themselves, will be £23,250.
Freezing the sum, rather than increasing it in line with inflation, means it is cut in real terms and ensures growing numbers of older people will have to pay.
The thresholds include the value of the person’s home if they are in a care home permanently, and their property is not occupied by their partner, a relative over 60 or a child. In this case, they may be forced to sell their home to meet the costs of care.