Taxpayers should not be forking out for care costs just so adult children can inherit a mini-jackpot when their parents die
Bob, a one-time pilot, died a few years back and his wife Maureen, now 91, has struggled along since, first with osteoporosis, now with Alzheimer's. The neighbours help out, and her son and daughter, in their late 50s and early 60s, do their best but live some distance away. Maureen will soon be going into a care home. The house will be sold – a four-bedder that will fetch around £350,000 – and her savings and state pension used to finance her nursing home costs. If she survives for any length of time, most of her assets will be used up and the son and daughter will inherit almost nothing.
Some people regard this as a scandal. A life spent working hard, paying taxes, even fighting for your country, and then you see it all whipped off you. You are punished for thrift and left impoverished in a nursing home by a society that has lost its compassion.
But let's take a reality check. Down the road from Maureen live Phil and Maxine, both in their late 30s, who have three children. They are paying a huge sum on their £250,000 mortgage, the only way they can afford a decent family home in the area. Every month it's a fight to keep afloat financially.
The scandal is not that Maureen's home and savings will be taken off her. Where else would the money go? If her nursing home bills were entirely picked up by the state it would be Maureen's "children" – two adults who have paid off their mortgages and are about to retire – who would be awarded nearly £200,000 each when Maureen dies. What warped sense of social justice sees Phil and Maxine paying taxes to cover Maureen's costs, just so her adult children can scoop a mini-jackpot?
Our cover story this week features Ted Beales and his son's fight to obtain free "NHS continuing healthcare". It's difficult not to have sympathy, given his father's extreme condition. What's more, if the NHS is going to offer this scheme in England and Wales but then makes it virtually impossible to obtain (unless you have good lawyers), it should stop kidding people it's there.
Crucial to the debate around care home costs is the idea that homeowners scrimp and save to build up the equity in their property, ony to have it stolen off them. Really? Maureen's £350,000 house cost £13,000 when purchased 40 years ago. The rest has been unearned inflationary gains. Did the family who rented a home over the same period and "earned" nothing from the property market work any less hard?
Since I bought my own home in south London seven years ago it has "earned" more than I have from working at the Guardian over the same period. If I lived in Hull it would have "earned" nothing. Yet millions of people are gripped by the idea that these unearned inflationary gains should be protected by other taxpayers, and passed on free of tax to their (adult) children.
Before the last election there was a hysterical campaign to abolish inheritance tax, "the hated death tax" according to the Daily Express, "the Labour death tax" according to the Daily Mail. There were some interesting figures last week from the Office for National Statistics that expose just who this campaign was really on behalf of: the already very well-off. Only 3.6% of people inherited a sum above £1,000 between 2008 and 2010. Over half of them picked up less than £10,000, and nine in 10 were below £125,000. Hardly a penny of that would have been taxed under the then-prevailing IHT rules.
The truth is that the vast majority of inheritance falls into very few hands. In those two years, £57bn of the total £75bn in inheritances went to adults who were already in the top quintile of the population. Make no bones about it, campaigns to cut inheritance tax have one purpose: to protect the very wealthy.
John Major, in his first speech as leader of the Conservative party, envisioned a society with wealth "cascading down the generations". Instead we have a society where the progressive reduction of death duties means that wealth congeals rather than cascades, with all that means detrimentally to enterprise and entrepreneurship.
My own philosophy is that individuals, where able, should work hard, accumulate savings, pay taxes and help the less fortunate, and use their savings to enjoy retirement and pay for care. There is no glory in bequeathing wealth to someone who did not earn it, and no shame in not leaving a penny.
• Names and details have been changed
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