Social care cost cap and flat-tier pension brought forward

The government will bring forward its overhaul of the pension system and social care funding by a year, the chancellor has announced.

George Osborne said the flat-tier pension, worth around £144 a week, would now start in 2016.

A cap on the amount the elderly pay for social care in England - which was to be £75,000 but will now be £72,000 - would start in the same year.

The announcements come ahead of Wednesday's Budget.

It has been reported that the chancellor will announce a voucher scheme to help working mothers with childcare, but he refused to confirm this.

Mr Osborne promised to "help people who are young and people who are old", while sticking with the government's deficit reduction programme.

But, for Labour, shadow chancellor Ed Balls said not enough was being done to stimulate growth and accused the coalition of following the "economics of the lunatic farm".

'Generous'

The current full state pension is £107.45 a week, but can be topped up to £142.70 with the means-tested pension credit, and a state second pension which is based on National Insurance contributions.

Anyone who qualifies for the state pension before April 2016 will continue to receive their entitlement under the current system.

But, for new pensioners, the second state pension will be abolished.

Mr Osborne told BBC One's Andrew Marr Show that the "generous" flat-tier pension would be "a huge boost for people who want to save for their retirement".

He added: "That is another example of how this government is helping people who want to save, people who want to leave something to their children like their home, people who want to get on in life, people who do the right thing.

"Those two decisions are going to be enormously helpful."

The cap on social care costs, originally planned to be set at £75,000 and introduced in 2017, will now be introduced in 2016 at a level of £72,000.

This would only cover the cost of social care and people would still have to pay for accommodation and food - although some support will be provided.

Mr Osborne said the cap would protect people from "getting a disease in later life and having to sell their house" to pay bills.

For Labour, shadow minister for care and older people Liz Kendall said: "George Osborne is still failing older people and their families. Today's minor adjustments to the government's plan will still leave far too many selling their homes to pay for care."

She added that any cap above £50,000 would not "provide adequate protection" for people on low incomes.

Ms Kendall said: "We need a far bigger and bolder response to meet the needs of our ageing population: a genuinely integrated NHS and social care system which helps older people stay healthy and living independently in their own homes for as long as possible."

'Moral commitment'

Wednesday's Budget comes amid fears the UK could enter a "triple-dip" recession.

Liberal Democrat Business Secretary Vince Cable has suggested that borrowing more to fund capital spending could boost the economy.

Mr Osborne said: "I agree that we need to spend more on capital, which is why I had taken the decision in December to increase the spending on capital - but paid for.

"In the end this country has got to pay its way. We can't just keep on thinking the answer to our problem is more borrowing. You can't get out of a debt crisis by borrowing more and more."

Conservative former cabinet minister Liam Fox has called for corporation tax be reduced to zero and far bigger cuts to public spending, notably welfare.

But the chancellor defended the ring-fenced budgets for the National Health Service and international aid.

He said the 0.7% of national income earmarked for overseas aid was a "moral commitment" and "sound foreign policy for Britain".

Labour's Ed Balls, also appearing on the Andrew Marr Show, called for a stimulus package funded by increased borrowing.

He said: "Vince Cable, the International Monetary Fund, myself, many others are all saying unless you get the economy moving, unless you get some growth back, the deficit will stay high."

Mr Balls, who urged a cut in VAT, added: "The only reason why they won't now change course is to avoid their own political humiliation. That is no reason to stick to a failing plan."

He added it was the "economics of the lunatic farm" to call for more spending cuts and tax rises when those were the policies which had adversely affected recovery.