Inheritance? What inheritance?

Why save? The money or house you hope to pass on to your children is no w most likely to go on keeping you in a private nursing home . . . Linda Grant meets three families who've become victims of the great birthright swindle

ON Friday 14 October, Nancy Loud listened with interest to John Major's speech at the Conservative party conference. She paid particular attention to his remarks on the National Health Service. ``Is it really likely,'' he asked ``that I would take away the security of mind that was of such value to my parents? I can tell you, not while I live and breathe will I take that away.'' On hearing this, Mrs Loud sat down and wrote to him.

She told the Prime Minister that her husband, now 83, had Alzheimer's Disease. She had nursed him at home in Honiton, Devon, for several years, but in 1989 had been advised that he needed heavier nursing care and should go into a residential home. To Mrs Loud's shock, she discovered that because there is no cure for Alzheimer's Disease, responsibility for her husband passed from the NHS to social services, which operates a stringent means test for those who need to be in a nursing home.

During his working life, Mr Loud had owned his own shop. While the couple were not wealthy, they were prudent and had invested in equities and other financial products to ensure that they would have a comfortable retirement. Nonetheless, Mrs Loud had no idea of the costs that were awaiting her. Since 1989 she has spent pounds 80,000 on keeping her husband in a home.

Mrs Loud, in her letter, told Mr Major: ``I would like to point out that the National Health Service has already been privatised for the elderly and sick who require long term nursing care and have no choice. In 1948, my husband paid a National Insurance stamp and continued to do this until he was 65. At that time, the government made a contract to pay him a pension at 65 and free medical care for the rest of his life.

``We have been called the short-straw generation, the generation which fought and made sacrifices in the Second World War which now is being harshly penalised. Most, like my husband and I, have always been loyal Conservatives. But we are now badly disillusioned and feel we have been very shabbily treated.''

Some weeks later Mrs Loud received a reply from the Prime Minister's office. It said her letter had been received; its contents noted.

``I thought my husband would stay in hospital,'' Mrs Loud says. ``The letter from the doctor said that he needed heavier nursing care. Well, where do you draw the line? I imagined that if it was nursing he needed, he should be in hospital.

``I'm quite happy to pay part, but I've written a cheque out today for pounds 1,473.33 for one month's care. As far as I'm concerned, we're being penalised for being thrifty. Our savings are not going to last forever, he could go on for years like this.

``I have a daughter. I hoped that I would have something to leave her: you like to think you have something to leave your children. It shouldn't have been like this. I wish somebody would take this up on our behalf because there doesn't seem to be anybody out there who realises what is going on.''

It is not just the landed gentry for whom inherited wealth forms part of the fabric of life. People with little money often work hard, and when they ask themselves why they are doing it, the answer is to have something to leave their children and grandchildren. These aspirations are also at the heart of Conservative values. But increasingly large numbers of the elderly are finding that despite their best efforts, all they have accumulated is being eaten up in the cost of long-term care at the end of their lives.

Families like the Louds who believed that the NHS would take care of them from the cradle to the grave, were misled. Once there is no further possibility of medical treatment (and there is no current cure for Alzheimer's), the health service terminates its responsibility, even though the patient may need round-the-clock nursing care. Those with assets of over pounds 8,000 (in savings, investments or in the form of equity such as owning their own home) are obliged to pay for the entire cost. Given that a well-run nursing home can charge in the region of pounds 300 a week, the sale price of a small house will be consumed very quickly.

When their assets get down to pounds 8,000, the local authority has to take over the cost of care. But what families are often not told is that most authorities have contracts with particular homes. If the existing home is considered to be too expensive, the resident is likely to be transferred regardless, unless the relatives can pay a top-up. The Department of Health admits that the demands for payment will differ across the country, according to the council's resources.

The next generation is only now starting to learn the lessons. In August 1993, Jill Gillham's mother suffered a stroke which paralysed her down her left side and affected her speech. At the end of the year, the hospital told Mrs Gillham that there was nothing more they could do for her mother. Mrs Gillham was prepared to look after her herself, but she was told that she could not cope and that a nursing home was the only answer. She was informed that since her mother's only asset was her flat, it would have to be sold to pay for the nursing home.

A month earlier Mrs Gillham's father had died. Had he still been alive, the council would not have been able to force the sale, as the law allows a partner to stay in the home as long as they are over 60. ``She went into the home in December, and I've just had a letter from the council telling me how much I have to pay. It's pounds 10,000,'' says Mrs Gillham. ``We have to pay pounds 1,400 every month out of the money from the sale of the property. It's only going to last two and a half years.

``This was totally unexpected: you only find out when it's too late. I have very high feelings about it. I think that the citizens should provide for old folks who are incapacitated. But it's this paying twice that I don't like.

``I'm an only child and my son is an only child. My parents thought they would have a bit to leave to me, and that would be left in turn to their grandson. What's happened to us makes you think very differently. I think, why save? Why shouldn't we enjoy it now? Why save for Owen when it might never come to him? I'm not being totally selfish, I just think the care should be there.''

Jim Bassett (not his real name) stood up to the system and won. Eighteen years ago, his mother-in-law began to show signs of frailty and the family decided it would be a good idea to pool their resources. Both houses were sold and a larger one purchased. The Bassetts had more equity from the sale of their house to put in, and Mr Bassett took on the mortgage. The house was converted at considerable expense, providing a self-contained granny flat.

But then she contracted Alzheimer's. ``My wife looked after her for a long time but it got worse and worse,'' Mr Bassett says. ``My wife had a sort of nervous breakdown and her mother was taken into hospital.'' His mother-in-law was judged to have assets - her share in the property - and a social worker told Mr Bassett that because he and his wife were under 60, the house would have to be sold.

In fact, when it had been purchased, the Bassetts had arranged with their solicitor a ``survivor's rights'' contract. This meant no one party could force a sale, and the share of any one party would automatically revert to the others on their death, over-riding any will.

Mr Bassett was then told he should take out a loan against his future inheritance. When he refused, they said they would discharge his mother-in-law from hospital. When he said he would not answer the door, he was told she would be left on the doorstep. He called their bluff and she stayed in hospital.

``I kept getting messages from the hospital saying that because I wouldn't sign a finance document and they wanted to get her out, I was denying her rehabilitation and contact with other patients. I said, `sorry that's not my problem'. Anybody who wasn't as hard - or however you like to describe me - as I am would have sold their house and taken out a loan they couldn't afford. I think it's completely out of order. I've got no conscience about what I did. She would have got far better care in hospital than in a residential home. Every bodily function had to be carried out by a nurse.''

Mr Bassett's mother-in-law died in hospital 18 months later at the age of 89.

It is social workers who have to bully and harass families into giving up their resources, and the profession is concerned that its members are being used as debt-collectors for local authorities. ``There is an increasing sense of frustration that social work is being totally corrupted by the ideology of the marketplace,'' says David Niven, chairman for the British Association of Social Workers. ``What they were trained for is counselling, assessment, allowing people to live with dignity, and getting resources for them.''

Even the right-wing Adam Smith Institute is aware that increasing numbers of people see no incentive in saving for their old age. ``My own mother says she wishes she'd given all her money away'' says the Institute's director, Dr Eamonn Butler. Along with organisations that act on behalf of the elderly, such as Age Concern and the Alzheimer's Society, the Institute is grappling with the question of who should pay for the burgeoning population of old people.

The Adam Smith Institute's solution is long-term care insurance. But when Mercantile and General, a financial institution, carried out market research, it found that while people welcomed the idea, there was a good deal of suspicion. Would such a policy be prohibitively expensive? Would it contain loopholes though which those most in need of care could fall? A new eye test, for instance, can detect those who are likely to develop Alzheimer's. Will such people be denied entry into schemes, defeating the object of the insurance?

Henry Caton, director of the Alzheimer's Society, spoke at the Conservative Party conference on the problems of financing long-term care. ``Property ownership is based on the idea that you will have something to pass on,'' he says. ``The Conservatives are the party which has stressed thrift and family values. The difference in the future will be between those whose parents leave them a house and those whose parents don't.

``Is it reasonable to expect taxpayers to pay for expensive care so that people can preserve their inheritance? I feel very conflicted about it. You can quickly be pauperised paying for long-term care for which the NHS is divesting itself of any responsibility.''

A spokeswoman at the Department of Health defended the Government's position. Just as the old Department of Health and Social Security was divided into two ministries, there is now a separation between ``clinical'' care (provided by doctors) and ``social'' care, which can take place in the community. Only the former is covered by the NHS. ``People in nursing homes still get NHS care from their GP,'' she argued. There is nothing new, she said, about means-testing benefits.

But the Shadow Health Secretary, Margaret Beckett, said: ``This problem has been coming for a long time. When John Major made his speech about inheritance cascading down the generations as a result of the policies of this Government, I made a speech saying it will cascade just as far as the first generation in which the parents need long-term nursing or residential care.''

Ten years ago the Conservatives mounted a campaign to persuade council house tenants to buy their own homes. Much was made of the fact that they would then have something to hand on to their children. Those who continued to pay rent may yet have the last laugh.

We would like to hear from other families with similar problems. Please write to Real Life, Independent on Sunday, 40 City Road, London EC1Y 2DB.

(Photographs omitted)