Andy Burnham considers 10 per cent ‘death tax’ to fund free social care for elderly

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The new Prime Minister has vowed to fix Britain's "broken" social care system and is understood to be keen on an NHS-style system that would be free at the point of use.

As health secretary in 2009 under Gordon Brown, Mr Burnham proposed replacing inheritance tax with a 10 per cent tax on all estates.

Asked if he was still looking at that option, Mr Burnham avoided answering directly, saying: “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.”

However a No 10 spokesperson has since insisted that there are "no plans" for a death tax.

“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 Prime Minister has warned that without urgent change the NHS "will collapse" but has refused to put a timeline on his reforms.

Read more: Andy Burnham warns NHS will ‘collapse’ unless social care is reformed as Badenoch urges PM to rule out tax hikes

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Asked on Monday if Mr Burnham was looking at using a death tax to fund the reforms, a No 10 spokesperson said they were "not going to get ahead of his update on this issue" due later this week.

The PM had been "clear about the consequences of not doing it", the spokesperson continued ,"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.”

Currently, death duties are paid on left behind assets worth more than £1m.

The standard rate of inheritance tax currently sits at 40% on assets over this threshold.

Last year the government made £9 billion from inheritance tax. Spending on social care is due to rise to £39 billion by the end of the decade.

Unlike NHS care, social care is not free at the point of use and high costs sometimes mean people are forced to sell their homes to pay for what they need.

People with savings worth more than £23,250 are not entitled to help with the cost of care from their local council.

Mr Burnham is expected to make a speech on adult social care in the coming days as he aims to “run towards problems that have been neglected”, according to a No 10 source.

Labour, under Sir Keir Starmer, faced criticism after the party was elected in 2024 for scrapping plans for an £86,000 cap on the amount anyone in England would need to spend on their personal care over their lifetime, having argued the proposals were not “deliverable” in the time frame.

Conservative Party leader Kemi Badenoch has challenged Mr Burnham to rule out tax rises or increased borrowing to pay for social care reform.

In a letter to the Prime Minister ahead of the expected intervention on the issue this week, the Tory leader said her party was willing to work with the Government but only if two “core principles” were met.

She wrote: “First, any solution to the issues around social care must also be fair to those who have made provisions and saved up over the course of their lives.

“Second, the money must be found by reducing current spending. You must rule out any tax rises, or increased borrowing that will ultimately fall on the next generation to pay for.”

She continued: “The tax burden has risen to a record high under Labour, and there is already speculation that you will increase taxes further at the budget this autumn in order to pay for all the things you have announced in your first week, plus the outstanding gaps in funding for the defence investment plan.

“On borrowing, over the course of this Parliament the Labour government is currently planning to borrow over a quarter of a trillion pounds more than the plans you inherited, and debt is forecast to rise every single year.

“With businesses closing or relocating, youth unemployment higher than in the eurozone, and the cost of living already causing real hardship for many people, the last thing Britain needs is further tax increases to pay for social care.”