Hubris in the U.K.
The Weekly Standard, May 26, 2017
Special advisers to political leaders need to get out more. Prime Minister Theresa May's decision to sneak what was quickly labeled a "dementia tax" into the Conservative party's general election manifesto (the British general election will be held on June 8) was reportedly heavily influenced by Nick Timothy, a Rasputin (with beard to match) in the court of a prime minister with few confidants. It was inserted into the manifesto at the last minute absent, reportedly, much consultation to speak of with those who would be actually facing the voters. That was a mistake.
Within days of the manifesto's release, one poll showed that the Tory lead had dropped by 5 percentage points to (a still immensely comfortable) 12 percent. This was almost certainly due, in no small part, to the dementia tax (or, to describe the culprit more politely, one of the new proposals for the funding of "social care").
Medical progress is uneven. Lifespans have been extended, but bodies and minds have struggled to keep up. There has been rapid growth in the number of the elderly who find it difficult or impossible to cope on their own, and there has been a corresponding growth in the expense of caring for them. In the U.K., government will pay for nursing-home care, but only after the person staying there is down to his or her last £23,250 in assets (roughly $30,000). If Methuselah is looked after in his own home, however (something that saves the state money), the value of his residence is not counted in that total: He gets to hang onto his house and pass it on to his heirs. Responding to the widespread perception that the system was too harsh, David Cameron's coalition government had earlier brought in reforms that included the introduction (delayed until 2020) of a porous and less than comprehensive "cap" of £72,000 on what anyone could be charged for social care.
May's idea was very different. Instead of a cap there would be a floor. To put it far too simply, the last £100,000 in assets would be shielded. Apart from that, there would be no limit on how much Methuselah could be asked to pay. Turning the screw still tighter, the old boy would no longer be doing his heirs much of a favor by staying on at home. Under May's rules, the value of the house could be used to defray the cost of his care, although (if he preferred) only after his death: Compassionate conservatism lives on.
People with Alzheimer's and other forms of dementia can be relatively physically fit, at least initially. They can live on for quite a while, and the bill for looking after them can rise accordingly: A lifetime (or lifetimes) of savings could thus be wiped out by bad luck or a bad gene. On the other hand, be fortunate enough to be killed off, say, by cancer or a kindly coronary, and the state will still pick up the tab. The thought that some diseases were to be rendered more equal than others obviously didn't worry May's team overmuch. And the prospect of draining wealth from the wealthier they considered a feature, not a bug. May intends to drag the Conservative party to the left. A further slice of redistribution would not come amiss.
To believe this was either good politics or good policy was nuts. Voting turnout among the over-65s (some three-quarters of whom are home-owners) is high, and, at the time the election was called, they strongly favored the Conservatives. Well, they did: The "dementia tax" (which could hit millions of people) has triggered some of their deepest anxieties about what lies ahead in what's left of their lives.
Mrs. May might not have much time for Mrs. Thatcher, but she would have done well to remember the Iron Lady's reluctance—fueled both by fear of punishment at the polls and of damage to the country—to do anything that could hurt "our people." Our people save, our people own their homes, our people want to pass something onto the next generation. These were qualities that Thatcher rightly believed were good for the social and economic health of the nation, qualities that, as she also understood, attracted such people, our people, to her version of Conservatism.
And our people have already paid a disproportionate amount of tax to fund a welfare state that, if May got her way, might stick them—at a time when they were essentially helpless—with another, possibly monstrous bill, a dying-too-slowly tax, lest the death tax itself (Britain's inheritance tax) was not enough to do the trick. The richest could, in all likelihood, weather the costs. As is so often the case with redistributive taxation, those who would be hurt the most would be the aspirational, the middling successful: Our people.
The private sector can do only so much to defray the costs of long-term home care. It would be a challenge for insurers to offer affordable coverage against a risk that is so unpredictable and, potentially, so large, even to the young. Those foolish enough to have entered middle age (let alone anything grayer) by now would have a vanishingly small chance of finding the insurance they might need. Risks of this type are best very widely pooled. In Britain that means either extra funding by the taxpayer or cutbacks in government spending elsewhere: Whatever some may claim, there are places to look for the latter.
The last time that May's government took aim at our people (by attempting to increase FICA-style charges on the self-employed), it had to back down. And despite dishonest denials in recent days of a U-turn, that looks to be how it will go with the dementia tax. There will be a cap, although, significantly and cynically, May has not yet said how high it will be.
That evasion may be one reason to suspect that the majority she seems on course to win will not be too big. Which may be for the best. May's opponent, Labour's far-left Jeremy Corbyn, cannot be trusted with any degree of power. But the dementia tax is a reminder that the over-promoted Theresa May cannot be trusted with too much.