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Scots to be hit by cost of care in England

Thousands of Scots will be dragged into paying inheritance tax under plans to cap elderly care costs in England.

The Conservatives have overturned a pledge to increase the inheritance tax threshold to £1 million. It will be frozen at £325,000 until at least 2019.

When the effects of inflation are taken into account, the move will leave thousands more Scots forced to pay the tax over the next six years, the Tory-Lib Dem Coalition has confirmed as it secures funding to create a new elderly care system in England.

Ministers say they want to end the scandal of pensioners being forced to sell their houses to pay for nursing homes. The Coalition will raise the limit at which people have to pay for care to £123,000 – up from £23,250 – by 2017 with a new cap meaning older people will only ever be charged a maximum of £75,000.

However, critics warn many people will still have to sell their house to pay for their care. And there were clams thousands would be dragged into inheritance tax – which kicks in at 40% – under the plans for a three-year extension of the freeze on the £325,000 threshold for individuals and £650,000 for couples.

Labour accused ministers of one of the fastest "U-turns" in history, just eight weeks after Chancellor George Osborne outlined plans for a rise in the inheritance tax threshold.

The Tories pledged in 2007 to increase it – in what was seen as a masterstroke that reportedly convinced then Prime Minister Gordon Brown not to call a snap election.

The Coalition yesterday confirmed Scots would be hit by the inheritance tax raid. How-ever, a spokesman said the Scottish Government would receive a so-called "Barnett consequential" – a proportion of the money – in the normal way.

The £75,000 cap is higher than the figure recommended by the Dilnot Commission.

Labour said it welcomed elements of the announcement, but described the plan as a "flawed prospectus" and warned homes "would still be lost".

The National Pensioners' Convention said the proposals "simply tinker at the edges" and that a £75,000 cap "will help just 10% of those needing care, while most will have to struggle on with a third-rate service".

However, Vince Smith-Hughes, from Prudential, said the new cap would enable people to "start planning".

Health Secretary Jeremy Hunt said: "We are trying to be one of the first countries in the world which creates a system where people don't have to sell their own home."

Scotland has a system of free personal care for older people both in their own homes and in nursing and care homes.

l The Scottish Parliament's finance committee has warned Scotland's public services are not equipped to meet the demands of a rapidly ageing population. The number of pensioners is expected to rise by 26% by 2035. In the same period there will be only a 7% increase in the working population.

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Local government

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