Andrew Dilnot’s review of social care has been called a "once-in-a-lifetime" chance to fix the way Britain finances care for its growing numbers of old people.
At the moment care for the elderly is means-tested and anyone with more than a relatively modest £23,250 in assets has to pay their own way. As a result, older people fear that their life savings could be swallowed up by care costs, leaving them nothing to pass on to their children.
The report now suggests a "shared payment" system, where both the state and individuals may have to pay more towards care costs. It is likely that individuals will be responsible for all care costs for a number of years, but once costs exceed a set limit or cap, then the state will step.
A cap of between £35,000 and £50,000 has been suggested, which would almost certainly mean that the Government would have to raise taxes or cut other public spending to pay for it.
New Treasury figures show that while the initial cost will be £2.5 billion a year this will double within a decade to around £5 billion - equivalent to £200 per household.
Another solution to the new hefty price tag would be for taxpayers to buy insurance, although at present, insurers are reluctant to cover what could be a limitless cost.
Prime Minister David Cameron will today welcome the report and Government ministers will call it a "serious and thoughtful" attempt at tackling a major issue.
However, despite calls from an alliance of charities urging political leaders not to “let reform fall off the table for another generation," it is unlikely that any new system will be in place before the next election.
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( 3 / 167 )In a speech in Madrid to the Spanish Foundation for Analysis and Social Studies think-tank, Iain Duncan Smith, Secretary for Work and Pensions, will say that UK businesses should recruit more unemployed young Britons rather than relying on labour from abroad.
He will go on to say that if Government policy has prepared young people for work, "we need businesses to give them a chance", otherwise they will be lost to dependency and hopelessness.
In his speech Mr Duncan Smith will highlight the Government's drive to cut "painfully high" unemployment, saying that it depends not only on welfare reform and training but also on getting immigration under control so that British workers do not face so much competition for jobs from migrants.
He will say that the Government is determined to create an immigration system "that gives the unemployed a level playing field".
"If we do not get this right then we risk leaving more British citizens out of work, and the most vulnerable group who will be the most affected are young people," he will say.
Mr Duncan Brown’s comments appear to echo Gordon Brown’s 2007 slogan of ‘British jobs for British workers’, which was then widely criticised when it emerged that around 80 per cent of the jobs created during Labour's time in power went to migrants.
However, official figures suggest that almost 90 per cent of the 400,000 jobs created in the UK in the past year went to foreign workers.
Mr Duncan Smith will say that while immigration "plays a vital role" in helping bridge certain skills gaps, there are many foreign nationals in low-skilled or semi-skilled jobs that could easily be done by unemployed Britons.
"Good immigration is managed immigration. It should not be an excuse to import labour to take up posts which could be filled by people already in Britain," he will say.
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( 3 / 181 )Britain and other European countries have welcomed the Greek parliament’s vote for severe austerity measures, which should lead to a second bail-out programme thought to be as much as €150bn.
Following the vote, which was passed by 155 votes to 138, with seven abstentions, the FTSE jumped 89.07 points - its biggest one-day gain for more than two months – and the Euro rose to a two week high.
Had Prime Minister George Papandreou lost the vote there would almost certainly have been snap elections and a default on its existing debt, which would have been disastrous for European and global financial stability.
Greek’s largest creditor, Germany was delighted wit the news. Chancellor Angela Merkel said the vote was “really good news” and important for the stability of the Euro.
However, most analysts believe that the vote will only delay the crisis, as Greece’s debt looks unsustainable. Jens Weidmann, president of the German Bundesbank, said: "We've made an important step but we are not at the end yet."
And outgoing European Central Bank member Axel Weber said earlier this week: "ultimately, solving the Greek debt problem will have to deal with the outstanding, past amount of debt".
Following yesterday’s vote, Greece faces the huge question of whether it can implement the austerity programme well enough to satisfy the next inspection of international authorities in three months' time. It also has to raise up to €50bn from the sale of national assets.
Many experts think that this is not enough time. Raoul Ruparel of Open Europe, the London-based think-tank, said: "Although this may pave the way for a second bailout, a Greek default still looks inevitable in the longer term. Delaying tactics will only increase the cost of an inevitable restructuring, particularly for European taxpayers, who soon will own the majority of Greece's debt."
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( 3 / 234 )Under plans to be unveiled next month, local councils will be able to set their own business tax rates and keep the money raised rather than paying it to the Treasury.
Devised by Communities Secretary, Eric Pickles, the scheme will be outlined to the Local Government Association (LGA) conference in Birmingham by Deputy Prime Minister Nick Clegg.
Under the new system a cap will be imposed by the Government but different areas of the country will be free to lower the tax as they wish, which could attract more firms to set up in their areas.
Currently, central Government sets the business rates, which are collected by councils but sent to Whitehall, which then redistributes the proceeds in the form of a grant, which is used to fund local services such as the Police or Fire Services.
In his speech Mr Clegg will reassure areas with currently less business income that no authority will receive less money than it does now.
"I guarantee any new system will be fair. More deprived areas will not lose out," he will say.
Mr Clegg will also tell the conference that councils currently control less than half of their budgets, but with the localisation of business rates, that could rise to 80 per cent or more.
He will also argue that with the power to spend money as they see fit, councils can better address local priorities and offer greater incentives to attract successful firms to their area.
Councils will also have the power to borrow against business rate income to fund local development.
"We have to create the conditions for communities to invest in their own success. That means putting our money where our mouth is to give you proper power over spending, as well as more control over the tax you raise and keep so, for example, you can fight for businesses to come to your town," he will add.
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( 2.9 / 228 )The Chief Executive of a body responsible for UK mortgages worth £80bn has warned that there could be a tsunami of house repossessions if interest rates rise too soon.
His words are seen as a reaction to the Bank of International Settlements’ (BIS) annual report, published on Sunday, which urges the UK to raise rates to bring down inflation.
Richard Banks, the Chief Executive of UK Asset Resolution (UKAR), said that the industry may have been too lenient with some of its customers, and that a policy of "tough love" would be fairer to people facing long-term difficulty in keeping up payments on loans taken out when house prices were at their peak and personal incomes were on the rise.
UKAR, set up to run the nationalised mortgages of Bradford & Bingley and parts of Northern Rock, is the country's fifth largest mortgage lender. But 23,000 of their 750,000 mortgage holders are more than six months behind with payments.
Mr Banks said that the number of people falling behind on payments could get "scary" if lenders did nothing to prepare for higher rates.
"You can see if you don't do something about it, you can see a tsunami," he said. "If you don't get into the hills you could get drowned by this. If you don't manage this properly it could get very messy."
Banks’ remarks follow a warning last week from the new regulator set up to spot financial risks in the system – the Financial Policy Committee (FPC) inside the Bank of England – that warned banks may be providing a "misleading picture of their financial health" if they were not making big enough provisions for borrowers in difficulty.
It also noted that the most "vulnerable" households were concentrated in a few banks. It did not scrutinise UKAR but noted that the two other bailed-out banks, Lloyds Banking Group and Royal Bank of Scotland, had the largest exposure to customers whose mortgages were bigger than the value of their homes.
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