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Neil_F

Coach
Joined
Jul 5, 2007
Messages
848
Location
Islington
I'm really hoping someone can explain this to me because I don't understand it.

Social care (excluding accommodation costs) will be capped at £75k per person and additional help will be provided for those with assets worth less than £123k. Any additional cost will be picked up by the taxpayer. This will be (apparently) paid for by dragging more people into inheritance tax.

Our esteemed Deputy PM says this is to end the "scandal" of people having to sell their house or spend their life savings to pay for their care. I don't get it.

Isn't the point of life savings and property equity to fund retirement and care in old age? I perfectly understand that people want to build something to pass on to their children but this is simply shifting the asset run down from the point that care is required to death; it won't be necessary to sell the house for care but it will when the inheritance tax bill comes in so the children won't inherit anyway.

I just don't understand it at all. This is from the DPM that thinks we should have a mansion tax and that social mobility is too low. He then advocates underwriting the asset rich with taxpayer money so that they may maximise the inheritence their children receive.

It is perfectly right that those who aren't able to pay receive support with care. There is a discussion to be had about incentives and the fact that longer term insurance measures should be put in place to facilitate that rather than have the taxpayer pick up the tab. These proposals though are effectively a step towards the nationalisation of the care industry that benefits the richest so that their children can inherit the benefits of a twenty year housing price bubble.

It has been done of course because the eldest vote in the greatest numbers. It is shameless politics that does nothing to advance the long-term interests of the taxpayer.
 

Crabby Shrimper

President
Joined
Nov 18, 2003
Messages
3,747
Location
Newport
Our esteemed Deputy PM says this is to end the "scandal" of people having to sell their house or spend their life savings to pay for their care. I don't get it.

Isn't the point of life savings and property equity to fund retirement and care in old age? I perfectly understand that people want to build something to pass on to their children but this is simply shifting the asset run down from the point that care is required to death; it won't be necessary to sell the house for care but it will when the inheritance tax bill comes in so the children won't inherit anyway.

Ok, think about it this way. Two people start off with identical capital, and have identical incomes. One spends his money as he earns it, funding a lavish lifestyle. The other saves a sizeable amount to look after himself in old age.

Now, they reach retirement age, and eventually need care. One has to fund his care through the money he's sensibly saved, whilst the other, who's spent most of his money on a great life, then gets his care paid for.

The moral of the story? Spend your money. Why save for a rainy day when you know you'll be bailed out?

Having said that, I really dislike the idea of inheritance tax. A man had a decent salary, and paid income tax on it. He then saved, and paid income tax on the interest. When he died his offsprring have to pay inheritance tax on the money. That's three times the government have had a share!
 

MK Shrimper

Well-known member
Joined
Aug 6, 2005
Messages
52,329
Surely the one who funded his lavish lifestyle paid more in VAT than someone who saved it, and in consequence helped others by buying stuff? If everyone put their money into the bank there would be very little economy surely?

Disclaimer: I'm hopeless at this financial stuff.
 
Joined
Jan 24, 2007
Messages
2,299
Location
leigh on sea
Surely the one who funded his lavish lifestyle paid more in VAT than someone who saved it, and in consequence helped others by buying stuff? If everyone put their money into the bank there would be very little economy surely?

Disclaimer: I'm hopeless at this financial stuff.

The idea of savings is the banks then lend the money to people to invest and create jobs. That's the theory at least. Speaking to a friend over the weekend who mentors budding entrepreneurs BTW he's made his millions so does know what he's talking about) he was apoplectic at the inability and unwillingness of banks to invest in good ideas. His main counsel to these budding capitalists is don't mortgage your house to fund your idea but that is exactly what they are having to do.
 

Neil_F

Coach
Joined
Jul 5, 2007
Messages
848
Location
Islington
he was apoplectic at the inability and unwillingness of banks to invest in good ideas. His main counsel to these budding capitalists is don't mortgage your house to fund your idea but that is exactly what they are having to do.

The banks are being told by government and regulators to hold more capital and take fewer risks. It is not surprising when this results in fewer loans to small companies with limited credit histories and few assets.
 
Joined
Jan 24, 2007
Messages
2,299
Location
leigh on sea
The banks are being told by government and regulators to hold more capital and take fewer risks. It is not surprising when this results in fewer loans to small companies with limited credit histories and few assets.
but Neil, these are exactly the projects they should back. The one he was so disappointed with had £1 million orders. I won't tell you what he thought of Vince Cable.
 

Neil_F

Coach
Joined
Jul 5, 2007
Messages
848
Location
Islington
but Neil, these are exactly the projects they should back. The one he was so disappointed with had £1 million orders. I won't tell you what he thought of Vince Cable.

I'm not defending the banks but government (this one and the last) are also to blame.

The banks are going to take 10 years to recover and restricting their ability to lend isn't going to help. The only thing that will change the situation is a glut of new entrants to the market but that is almost impossible given the regulatory burden.

This is why funding platforms such as Kickstarter have started to appear but they are limited in what they can do.
 
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