The Chancellor's decision will benefit 30,000 elderly people ' saving them £28 a week
Industry figures have welcomed the immediate abolition of hospital accommodation charges for the elderly as detailed by Chancellor Gordon Brown in his 2003 Budget speech. The decision means pensioners will no longer see a reduction in their weekly pension entitlement to pay for hospital care.
Speaking in the Commons, Brown said the charges were unfair and would be scrapped immediately. 'It is a hotel charge imposed on one of the most vulnerable groups in our society,' he said. 'For everyone else in our country, other than those on pensions and benefits, hospital care is entirely free of charge.'
He continued: 'So for pensioners, even if they stay in hospital for a whole year, I am now announcing we will abolish this charge. That charge will be abolished with immediate effect for pensioners going into hospital.'
It is estimated that around 30,000 people will benefit from the move, each saving approx- imately £28 a week, a sum normally deducted to pay for elements of NHS care such as meals and accommodation.
The decision has been welc- omed by charity Age Concern, which has been campaigning on the issue for some time. 'We are delighted that the Government has scrapped the unfair rule which cuts older people's pension and benefits when they go into hospital,' said Gordon Lishman, director general of Age Concern England.
'This will be a huge relief to tens of thousands of older people who would otherwise suffer reductions in their pensions and benefits when they are at their most vulnerable,' he said.
Writers of occupational group life schemes also welcomed the Chancellor's decision to retro spectively abolish any tax charge that arose before 9 April 2003 because of multiple claims under certain group life policies. Similarly, from this date, the potential tax charge that could arise on such group policies will be scrapped.
Prior to the recent Budget announcement, the problem of a potential tax charge on unapproved group life schemes arose on second and subsequent deaths written under the same policy.
Ron Wheatcroft, technical manager at Swiss Re Life & Health, said the change will mean greater clarity and simplicity for employers, providers and intermediaries offering group life cover over £99,000 in tax year 2003/04.
'The amendment will create certainty for intermediaries as there will be no unexpected tax consequences and this should help boost protection cover for those whose earnings exceed the pension's cap,' he said.
'It is also helpful that this is resolved ahead of wider reform of pensions taxation, currently planned to take effect from April 2004. At that stage, pensions benefits will be available up to a lifetime limit initially planned to be £1.4m. Advisers can now be confident that any cover arranged on an unapproved basis beyond this limit will be free of tax, although any premium paid by the employer will attract a benefit in kind tax charge on the employee.'
Brown's decision to freeze Insurance Premium Tax (IPT) was also welcomed by the Association of British Insurers (ABI) although a reduction in IPT would have been more warmly received. 'There is actually a strong case for reducing IPT, but we are glad that the Chancellor has not moved to raise the tax,' said Peter Vipond, head of tax and regulation at the ABI.
