The government has said it has “no plans” for a 10 per cent “death tax” on all estates to fund sweeping reforms to the social care system.
It comes after both the prime minister and a senior cabinet minister failed to rule out it out as a way to pay for the creation of a new National Care Service that Andy Burnham said would cost up to £18.7bn a year.
As health secretary under Gordon Brown, Mr Burnham backed replacing traditional inheritance tax – which is a 40 per cent tax levied on all estates above £325,000 handed down after someone dies – with a 10 per cent levy on all estates passed on after death.
Asked whether he still backed such an idea to fund his care service, the prime minister’s official spokesperson said: “I’m just not going to get ahead of his update on this issue, which will come later in the week.
“And he has said in his interview today that creating a new system will take time. But he’s also been clear about the consequences of not doing it, which is that the NHS would collapse under the weight of having to care for people not really needed in the NHS system.
“So you’ve seen his determination to tackle this issue, and I think that gives you a sense of where his feelings lie.”
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Pressed on whether a 10 per cent death tax on all estates is something the prime minister is looking at to fund social care reforms, work and pensions secretary Pat McFadden also refused to rule it out.
He told Sky News: “Andy Burnham is going to be talking about social care tomorrow. This is a subject that’s been close to his heart for many years… He is determined, as he said, to put political capital into this, to put political energy into this. So we have to wait to see what he says in his speech tomorrow.
“There has been lots of speculation about what it will mean. I can’t tell you today, but what I can tell you is that this is a long-term challenge that’s faced the country for an awful long time.
“It hasn’t really been tackled in a fundamental way yet, but he is determined that in his time as prime minister, he’s going to face up to this long-term challenge, and he’ll have more to say about that tomorrow.”
But later on Tuesday, a government spokesperson clarified: “There are no plans for this. Fixing our social care system will require building a broad consensus. The old way of doing politics has held up social care reform for decades.
“Our immediate focus is on working together to find common ground and deliver the reforms needed to fix the future of social care - not imposing one particular solution or tax.”
The new prime minister, who entered Downing Street last week, has promised to use “whatever political capital I have” to reform social care, insisting he would not leave office without making “substantial” change to the system.
He has said he will seek cross-party talks on social care reform, warning the NHS “will collapse” if the system is not fixed.
Speaking to reporters on a visit to Portsmouth on Monday, Mr Burnham said other party leaders had already approached him saying they were prepared to engage in talks on the issue.
He said: “It’s one thing to say that and another to actually then mean it and try and find common ground. But let’s try on this issue.
“No party is in a position where they’ve got the high ground – we’ve all failed on this issue over decades and the pressure now on the National Health Service as a result of that failure is huge.”
Mr Burnham added: “I would like to see if we could arrange talks, cross-party talks, to build that spirit of collaboration from the start.”
