May Tells Rich They Have to Pay for Their Own Elderly Care

(Bloomberg) -- U.K. Prime Minister Theresa May will tell wealthy elderly voters that their home may be sold after their deaths to pay the bills.

Three weeks before elections, May is showing confidence in winning big by taking a calculated risk on a politically loaded issue affecting the slice of the population with the highest voter turnout. She will also promise further controls on immigration by doubling the levy charged to businesses for hiring migrant workers, according to a person familiar with the plans.

Social care has been a political football for years in Britain, with questions about how to pay for a growing elderly population kicked back and forth, and local councils complaining that they’re unable to bear the costs. In 2010 May’s predecessor, David Cameron, attacked an idea mooted by the then Labour government to take money from people’s estates after they died as a “death tax,” but May is now proposing doing exactly that herself.

“People are rightly skeptical of politicians who claim to have easy answers to deeply complex problems,” May wrote in a foreword to the Conservative election manifesto to be published Thursday. “It is the responsibility of leaders to be straight with people about the challenges ahead and the hard work required to overcome them.”

Under the election manifesto’s plan, people will have to pay the full cost of their care until their total assets are below 100,000 pounds ($130,000). The government will then take up the cost. People’s homes won’t have to be sold until they and their partner have died. An annual payment to cover the cost of heating in winter will also now go only to the poorest pensioners.

Immigration Pledge

Her promise to cut immigration and increase the levy on companies employing migrants in skilled areas -- set to double to 2,000 pounds per employee per year by the end of parliament -- may not prove popular with business, but is set to play well with those voters who have felt left behind by globalization. This will also include an increase in the charge for migrants to use Britain’s health service, to 600 pounds for migrant workers and 450 pounds for international students, the person familiar said.

The manifesto will also drop the triple lock on taxes promised by Cameron, under which income tax, sales tax and national insurance could not be increased, and pledge to balance the deficit by 2025, according to the Telegraph newspaper.

The social care proposals will be good news for those whose total assets are below 100,000 pounds: the current threshold at which the government starts paying for people’s care is 23,250 pounds. But they will come as a disappointment to much wealthier people, who may have hoped May would adopt the proposals of a 2010 government-sponsored commission that proposed no one should pay more than 35,000 pounds toward their own care costs.

The announcement that the sale of people’s homes would be included in the means test marks another tonal shift from the era of Cameron and his Chancellor of the Exchequer, George Osborne.

Osborne made his political reputation in 2007 when he saw off Gordon Brown’s plan to call an early election by making an eye-catching promise to raise the threshold for inheritance tax to 1 million pounds.

The move was popular with voters, and helped cause a shift in the polls that led Brown to blink. But the tax break itself was one that largely helped the wealthy owners of large homes. By saying that such people will have to pay the vast bulk of their care costs, May is signalling that her interest is in people much lower down the income scale.