Burstow Calls For Curb On Winter Fuel Pay

Winter fuel allowances for pensioners should be means-tested to help fund an overhaul of the care system for the elderly, a former minister has suggested.

Liberal Democrat Paul Burstow, in a report with the Centre Forum think tank , said targeting the allowance would raise £1.5bn a year to help pay for a fairer care system.

The former care minister said it could fund the implementation of Dilnot Commission, which proposed capping how much an individual has to pay towards their care.

Dilnot recommended a £35,000 cap but Mr Burstow proposes raising this to between £50,000 and £60,000 to ensure a "fair and sustainable system".

Currently, elderly people in England have to contribute to their own care costs if they have savings of more than £23,000, but the report wants this raised to £100,000.

It said: "A reformed capped funding system is the most appropriate way of dealing with a broken social care system, a crisis that has lasted over 10 years."

Under Mr Burstow's plans, winter fuel payments - worth up to £300 a year - would be axed for all but the poorest and only paid to those already receiving pension credit.

This would mean more than 10 million of the 12.7 million people who received it in 2011/12 losing out.

The report claims the payment is an "anomaly" in the welfare system and little more than an "income boost" for the over 60s.

It suggested that, under the current system, a pensioner with assets of £100,000 would lose 82% of their value because of the cost of funding their own care.

This compares to a 37% loss under Dilnot, with a higher £50,000 cap.

Someone with an average value property would currently lose 65% of its worth but under a reformed system, this would fall to 22%, according to the report.

The ex-minister also proposed ending the relief on capital gains tax at death, claiming this would raise another £600m a year.

His intervention comes after growing rumblings about the sustainability of universal benefits for pensioners, which also include free bus passes.

Prime Minister David Cameron has committed to keeping the allowances in place until 2015 but many Tories are pressing for reform.

Recently Deputy Prime Minister Nick Clegg suggested there was a need to look again at curbing the payouts for the wealthiest pensioners.

But campaigners reacted angrily to the prospect of cuts in the future.

Saga warned that removing winter fuel payments would kill more pensioners unable to afford to heat their homes and also put people off saving.

Director general Ros Altman said: "Every winter, over 20,000 pensioners die of cold in this country and these 'excess winter deaths' would increase if more pensioners were denied their winter fuel payment."

Taxing the payments or raising the age of eligibility could be considered, she said, but the principle of universality should be protected.

Dot Gibson, general secretary of the National Pensioners Convention, said: "It's a shame that someone didn't buy Mr Burstow a calculator for Christmas - because if they had he would have realised that his plan just doesn't add up.

"Introducing a means-tested system will create a costly and inefficient bureaucracy which evidence shows will result in those who need it most failing to come forward to make a claim.

"Our social care system doesn't need this kind of tinkering at the edges - but a radical overhaul."

Shadow health minister Andrew Gwynne said: "The Government is completely out of touch with the immediate care crisis. Instead of sticking their heads in the sand they should engage in serious cross-party talks so we can get a proper agreement across all the political parties about how we fund long-term care in future."

:: Thousands of families affected by new means testing of child benefit have still not been formally informed of the changes.

HM Revenue & Customs has written to nearly 800,000 people about next week's shake-up, of an estimated 1.1 million believed to be hit.

Under the plans, families with a parent earning £50,000-£60,000 will lose the benefit on a sliding scale and those on more than £60,000 will lose it altogether.

HMRC has told parents they must stop claiming the money by this weekend or pay a new tax to cover the cost but more than 300,000 have yet to be contacted.

This means they will continue to receive the handout and have to fill in self-assessment forms to repay it in tax.