Axe free prescriptions, TV licences and the winter fuel allowance for well-off OAPs to help fund care system

Report said tax rises must be targeted at the middle aged and middle class

Over 40s and those on over £42,000 should pay more National Insurance

And pensioners who continue to work should be charged NI for first time

The report was commissioned by the King’s Fund think-tank

Benefits for well-off pensioners should be axed to pay for radical reform of England’s broken care system, a major report concludes today.

They should be stripped of free prescriptions, free TV licences and the winter fuel allowance to free up billions of pounds to fund long-term care for an ageing population.

The report, commissioned by the King’s Fund think-tank, said tax rises to pay for the type of care that a ‘decent society’ should be providing must be targeted at the middle aged and middle class – even those who have saved all their lives to fund their retirement.

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Benefits for well-off pensioners should be axed to pay for radical reform of England's broken care system, a major report concludes today

Everyone over 40 and those on more than £42,000 should pay extra National Insurance – while pensioners who continue to work should be charged NI for the first time.

The report also called for a ‘review of wealth taxation, including inheritance tax, which is too frequently avoided’. Written by a panel headed by eminent economist Dame Kate Barker, it concluded England’s current care system is in ‘crisis’ and is leading to ‘injustice, unfairness and sheer distress’ for millions.

Some are being pushed into ‘bankruptcy’ by the catastrophic costs they are being forced to pay.

Dame Kate warned that the ageing population means spending on social care as a proportion of GDP will almost double by 2025.

‘People say we cannot afford this,’ she said. ‘We have to afford this: we are not going to let people with dementia wander the streets.

‘If we are going to provide a decent society and decent care, we’re going to have to find the money.’

The think-tank last night called on the three main parties to be open and honest about the impact of this demographic time bomb – and to put forward detailed plans by the next election.

At present, people face having to pay full care costs if they have assets of more than £23,500. This means that tens of thousands have to sell houses each year to pay for care.

The Coalition is bringing in a new system imposing a cap of £72,000 on the amount people have to pay, with the state stepping in thereafter. Dame Kate said: ‘Under our proposals, some of the extra public funding will be raised from the better-off older population, so the costs will be shared more fairly between those who develop high social care needs and those fortunate to have few or none.’

She said those deemed by their council to have ‘critical’ needs should receive free social care. To raise the £5billion a year needed to cover the cost, she outlined a range of tax rises and spending cuts.

She suggested that, alongside a cut in the cost of a prescription from £8.05 to £2.50, exemption from charges should be limited to the poor, meaning pensioners would lose the automatic right to free medicine.

NI would go up by 1 per cent for everyone once they turn 40, while those earning £42,000 or more would face a similar hike. Working pensioners would also pay the tax; although at a reduced rate.

Dame Kate also called for a ‘comprehensive review of wealth and property taxation’.

Last night Ros Altmann, the government’s Business Champion for Older Workers, warned: ‘It would be dangerous in my view to extend the means-testing of pensioners because it penalises those who have saved.’

Professor Chris Ham, of The King’s Fund, said: ‘The proposals may not appeal to politicians … but these issues cannot simply be ignored.’