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“Disregards”, Deferred Payment Agreements and the “Dementia Tax”

In a recently published academic paper, I unwittingly considered the background to what was to become the “Dementia Tax” debate. There were many frustrating elements to that debate. For a start, the Conservatives’ proposal was not a tax in the true sense, but a liability to fund one’s own care in certain circumstances.

There was also the fact that the so-called “tax” was not limited to those suffering from dementia but could have covered those with a wide range of social care needs. In addition, as many readers of this blog will know, there is already a “dementia tax” in England in the sense that (for example) those receiving care in a care home and ineligible for NHS Continuing Healthcare might be expected to use their housing equity to fund their care. The proposal, whatever one’s opinion on it, was therefore a significant tweak to the current system rather than a fundamentally new principle.

The aim of my paper, forming part of a wider project on “Adult Social Care and Property Rights”, was to analyse the position of those who (used to) live in the home of a care recipient (“(former) co-residents”), and/or expected to inherit that home.

I noted the importance of “disregards”, whereby (in addition to the one for those receiving care in their own home), the mere occupation of the home by certain people (notably a partner or a relative over 60 of the care recipient) can prevent the home being included in a local authority’s assessment in the first place.

It’s not clear how those disregards might operate in a reformed system. Even where no disregard applies, the sale of the home might still be deferred (by virtue of a “Deferred Payment Agreement”) until after the death of the care recipient.

I argued, however, that many former co-residents were unlikely to be able to prevent the sale of the home eventually, unless they were able to pay the debt owed themselves. They might also find themselves waiving any priority that they might have enjoyed over the local authority by virtue of owning a share in the home, even though they basically aren’t required to contribute to the care recipient’s care.

My conclusion was that former co-residents can be significantly prejudiced by the social care system, even if they’ll often be in a better position than a former co-resident of someone who owed a different type of debt (for example to a private mortgage lender). The real cause of the prejudice is the decision (dating back to the beginning of the welfare state) to means-test social care in the first place rather than having a principle that it should be funded by taxation and made free at the point of delivery like healthcare.

In the aftermath of the election, it’s not clear what’ll happen to social care funding and provision: all we really know is proposals will be brought forward for consultation. It’s important to remember, however, that any reduction in funding streams for social care will prejudice those who lack the assets to pay for their care in the first place. What’s more, however fair the removal of the means test might be, the appetite for increased taxation to fund social care properly might simply be absent.

This blog was written by Brian Sloan