Leader: Let's protect the old, not their offspring

What is all this sudden concern for the lives of our senior citizens? Last week it was Peter Lilley on pensions, this week Stephen Dorrell on long-term care. It all sounds so prudent, so sensible, so far-sighted. A government which may have only a month or two left in power is taking the trouble to propose policies that take decades to bite.

Should we be grateful? Up to a point. Last week's pension proposals were promising enough. This week's long-term care proposals, however, are outrageous. Far from being a wise way to get individuals to take responsibility for their own old age and save the taxpayer some cash, Mr Dorrell's plot is a straightforward subsidy of inheritance. Taxpayers will lose to the tune of pounds 200m, so that a few middle-aged sons and daughters can inherit a house. That is not the best way to allocate scarce funds.

Mr Dorrell's proposals are not aimed at senior citizens at all. Why should they be? The old men suffering from Alzheimer's, and the frail old women who need full-time residential care, are not the people who lose out from the present arrangements. Either the state forks out the cash to pay their bills, or, if they have assets worth more than pounds 16,000, those assets (the houses they have already had to leave) are sold to foot the bills instead.

No: the people affected are their middle-aged sons and daughters, who had been counting on a nest egg. John Major's vision of wealth cascading down the generations has suddenly, for them, dried up; instead, elderly mothers and fathers have had to spend it looking after themselves. Nothing to help with Isadora's school fees, or to fund young Henry on a trip round the world. Most pertinently of all, no cash to help middle-aged earners to buy a bigger house.

Is there a problem at all? Well, yes. The present generation of pensioners had assumed that, as they have paid their stamps all their lives, with the cradle-to-grave mantra singing in their ears, the state would foot the bills in their old age. In the past the NHS did exactly that, by providing for them on geriatric wards. But the old wards have closed, partly because they were so expensive to maintain, and partly because the old and ailing are not best cared for in hospitals. At the same time, demand for long- term care is growing, as the population slowly ages and our lives lengthen. Someone has to pay for all that unanticipated care.

At the moment the state still plugs much of the gap. Many of those in long-term care get some form of state assistance. For the rest, money that would have gone into inheritance is used up instead, as those who have assets (usually houses) sell them off. In future, as home ownership among the over-sixties continues to rise, house sales should bear even more of the burden.

So what is Mr Dorrell's alternative? He says that people who take out insurance policies on reaching retirement will get additional protection from the state, above and beyond the insurance cover, to protect their assets. In other words, the state is stepping in to help wealthy families ensure that their assets can cascade down the generations after all. But hang on a minute. Surely people ought to use their assets to look after themselves? It is one of those unfortunate possibilities for which we should take responsibility, and accept with a good grace if it happens to us. Houses are, after all, the way that most of us save and invest our money, capitalising our rent over the years and making a tidy profit on the investment. If we need the money to look after us as we age, then so be it.

People who are desperately keen to pass on nest eggs to their children must just accept that they either take the risk of long-term care eating up the egg, or they must take out additional expensive insurance, or put by extra savings to make sure they are covered. Long-term care insurance is already available. Admittedly the premiums are pricey, but then so is the cost of long-term care. Guaranteeing an inheritance for the children is expensive, but that is the way to do it. It is not the business of other taxpayers.

It is true that this makes inheriting money and houses a rather random affair. Should a rich parent be knocked over by a bus, the house is passed on intact. Should she instead succumb to years of debilitating illness, the entire pile could be gobbled up. But that should hardly make us feel sorry for the offspring. After all, the fact that they were born to well- off parents in the first place was just a roll of the dice. The pounds 200m a year that Mr Dorrell is proposing to spend would not buy better care for anyone; it would not help pensioners in poverty, nor would it do anything for the old people who could never afford to buy their own homes in the first place.

The Government is right to be considering these slow-burning questions of how to support each generation through the extra decades between retirement and the grave. But the state should concentrate on helping people to take responsibility for themselves, regulating private provision and stepping in to support those in need, rather than wasting money protecting the privileges of those who have plenty.