Pensioners should pay extra tax to help cover the 1.7 billion annual cost of introducing a cap on social care bills for the elderly, a Government-commissioned review suggested today.
In a move designed to prevent older people being forced to sell their homes, the Commission on Funding of Care and Support called for the state to cover costs exceeding 35,000 in any person's lifetime.
Combined with a proposed increase in the means-tested assets threshold from 23,250 to 100,000, this would mean nobody requiring care in retirement would have to spend more than 30% of their assets paying for it, the commission said.
But it also raised the prospect of a "specific tax increase" to cover the cost to the Treasury - an issue likely to prove contentious at a time of deep public spending cuts across most of Whitehall.
In an eagerly-anticipated report published today, the commission said it would "make sense for this to be paid at least in part by those who are benefiting directly from the reforms".
"In particular, it would seem sensible for at least a part of the burden to fall on those over state pension age," the report stated.
"If the Government decides to raise additional revenue, we believe it would be sensible to do so through an existing tax, rather than creating a new tax."
Andrew Dilnot, the economist who chaired the commission, stressed that how to fund the proposals was a "political" decision that was up to the Government, but pointed out that pensioners did not currently pay national insurance.
While seeking to address the costs of care, the commission's proposals also included charging elderly people in residential accommodation for living costs such as food and accommodation. This would be capped at between 7,000 and 10,000 a year.
Charities urged the Government to act on the Dilnot recommendations after years of stalled reforms.
Mr Dilnot said there would be "disappointment" if a white paper on the recommendations was not published by next Easter.
He added that he would like to see reforms implemented "as soon as possible", which could be by 2014.
Downing Street rejected suggestions that ministers would kick the proposals into the long grass.
"The Prime Minister welcomes the report," a No 10 spokeswoman said.
"This whole area is complex, as well as multi-faceted. Certainly, the whole funding issue is not something that can be looked at in isolation.
"We have always said there is a price tag, but we are not going to back away from the issue.
The Department of Health said it had approached shadow health secretary John Healey's office last week about opening cross-party talks on social care reform.
Labour leader Ed Miliband, on a visit to a care home in south London, said he wanted to work with the Prime Minister and Deputy Prime Minister on the plans.
Health Secretary Andrew Lansley was due to make a statement to the Commons about the proposals this afternoon.
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