The Govan Widow Tax could come to haunt Scotland

The Govan Widow Tax could come to haunt Scotland

by Jonathan Stanley
article from Tuesday 30, May, 2017

After a moment or introspection and assessment of electoral chances by the Conservatives, the concept of a cap on social care costs in England is again backed by the party, and rightly so. It was brave and shrewd to reconfirm the concept but of course we are going to need clarity – and quickly – to reassure millions of property owners in England.  The SNP was quick to attack the Prime Minister, but as always the inept protest too much.

Scotland once prided itself on caring for the poorest in society. Isabella Ure Elder (pictured) was a generous donor to help Govan's widows in the last century. Give her a spiky bob and bright red twin set and their is a resemblance to the First Minister Nicola Sturgeon – but the similarity is alas skin deep.

Devolution took power away from Westminster and gave it to Holyrood. This creates two very obvious problems. Firstly, the UK government cannot have a one-size-fits-all formula for care funding anymore. It is creates differentials between different social groups in England and Scotland. For most day-to-day matters these are not sufficient to move people across borders but, as we found with tuition fees cumulative, amounts for some expenses can be very large indeed.

Which is why social care funding is about to become a nightmare for the SNP. Forget the Sewel Convention or Barnett Formula for a moment. What ever Theresa May's cap will end up being, there is now a widow's paradox to be dealt with. 

You see a widow in Govan, in a flat worth £86,250 she owns outright, finds herself in a curious position. She is hit not once or twice, but four ways by these policy differences:

1. As a widow she is more likely to need complex care (not in her own home) as she is more likely to have no one to look after her at home. The free personal care, which is not means tested, may not be enough to keep her at home, especially as it is clearly overstretched because everyone gets it for free.

2. Govan has some of the poorest health and and lowest property prices in the UK. She is likely to have very little assets beyond her home. Any contribution she has to make to hotel fees will come from the value of her property, above a threshold level.

3. The upper threshold for receiving state funding for complex care is £26,250 in Scotland – and will now be £100,000 in England

4. Personal and nursing care is free and not means tested in Scotland. It will be in some form in England.

We can assume safely the pay "all or nothing" model will not change quickly in Scotland. Lord knows what England will do, but I will work with the fact there is currently NO taper on asset depletion factored into May's policy. I am also factoring in NO cap on asset depletion, not until it is published anyway.

So in Scotland there is going to be an even bigger bias towards wealthy property owners with fewer care needs, or else live as a couple and so can have their property disregarded for care costs. Stay at home and pay nothing, leave your home and pay the lot. This leaves the Govan Widow £60,000 worse off potentially in Scotland than England, and she will end up paying all costs above her £26,250 threshold to cross subsidise a couple in a £430,500 manse just outside Selkirk who will pay nothing. 

The poorest woman in Scotland faces a liability far higher than a poor couple otherwise would, or that a wealthy home owner with fewer needs would.

Sounds like a Govan Widow Tax to me. 

£60,000 at the most, yet the others would pay nothing. This is a nightmare for policymakers and is a perverse outcome that will need redress. How can the Scottish Government remedy this? There are a few ways actually and none are palatable. 

The Scottish Government could disregard property entirely for care cost assessment. This would be popular but expensive as many pensioners live alone. It could also force local authorities under SNP control to disregard homes on a local authority basis. Thi would create a post code lottery and be a bitter pill for many but would let Sturgeon off the hook publicly. I would not rule it out for that reason alone.

The Scottish Government could tighten up or abandon disregard entirely. This would infuriate many who either live as a couple or live with a carer or dependent.

The Scottish Government could raise its own capital allowance, maybe as far as £100,000. This would be a huge giveaway but would align Scotland with England and give a better incentive to own a home. The radical left will be outraged, as will workers still sore of being taxed more than south of the border.

Finally a means test could be introduced to ensure only those who need care can pay a fair share towards it that protects the incentiver to accumulate capital through the generations. 

A combination of these options could also, of course, be worked into a credible policy. The SNP will be well aware that despite their rhetoric against Westminster this care policy farrago is going to belt them hard indeed and perhaps, just maybe, they could shut up about independence and sit down with the UK government, engage with its Green Paper and work hard to iron out differences between the two capitals. 

A little harmonisation would go a long way to smoothing the differentials that will sour the public mood very quickly, as we discovered following the Bow Group's fight against scrapping the care cap in England.

I am happy we led that fight that produced the fastest turn around ever by a sitting PM during a General Election. We in the Bow Group are taking a growing interest north of the border too, the SNP are on notice. There will be high expectations of them very soon.

Jonathan Stanley writes for and the Bow Group.

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