Labour rules out "death tax" to pay for elderly care

Ministers promise free residential care for the elderly after two years.

The government will today rule out legislation in the next parliament to impose a new "death tax" to fund social care for the elderly. The 10 per cent levy on estates had been among the options for funding a new National Care Service but was sharply criticised by the Conservatives and the right-wing press.

The health secretary, Andy Burnham, will promise to cover the costs of residential care after two years and provide free care in the home for those with the greatest health needs.

The pledge will be funded by freezing inheritance tax for the lifetime of the parliament, increasing the statutory retirement age of 65 and by greater efficiencies in the care system.

Last night, Alistair Darling pre-empted Burnham and confirmed during the Channel 4 Chancellors' debate that the idea of a levy on estates had been abandoned.

The Conservatives have called for an £8,000 insurance levy which would be payable at the age of 65.