Theresa May said 'nothing has changed' after her dementia tax U-turn. Oh yes it has

Theresa May’s social care policy was designed to save public money, but today’s U-turn means she will probably end up with a policy that would cost taxpayers billions and that will still scare and confuse the voters.

Usually, U-turns are a good thing. They mean a leader is listening to people’s concerns and is prepared to change policy to meet them. But this one makes a bad policy worse.

The plan for social care in the Conservative manifesto included withdrawing free care in people’s own homes from pensioners who would be expected to use the value of their property to contribute to the cost. Today, the Prime Minister announced that this cost would be capped, although she didn’t say at what level. She said the Government, if re-elected, would consult about the cap in a green paper. She may we​​​ll feel she has to suggest a figure in her interview with Andrew Neil this evening.

The change does not actually reverse the original policy, the effect of which is to take away free care in their own home from relatively poor home-owning pensioners. Rich pensioners – those with more than £23,250 in savings – are not entitled to free care visits anyway. All today’s “clarification” does is to put what May called “an absolute limit” on the amount that pensioners will have to spend on their own care. At whatever level the cap is set, this would be a new subsidy from the taxpayer that will benefit rich pensioners the most.

Jeremy Hunt, the Health Secretary, explained on the morning of the manifesto launch why a cap is a bad idea: “The reason we don’t think it’s fair is because you could have a situation where someone who owns a house worth £1m, £2m, has expensive care costs of perhaps £100,000 or £200,000, and ends up under that proposal not having to pay those care costs because they are capped and those costs get borne by taxpayers.”

As I wrote at the weekend, it is hard to understand why May put the original plan in the manifesto. I am told that her team has been working on the policy ever since she became Prime Minister 10 months ago: they are worried about the cost of social care and that it is unsustainable in the long term.

That was why she started her comments in Wales today by saying that there will be 2 million more people over the age of 75 over the next decade and that, without reform, “the social care system will collapse”. She believes her plans are essential for good government, requiring people to contribute more to their own care by drawing on the value of their homes, deferred until after death. Hence her rather macabre declaration: “Nobody is going to have to pay for their care while they are still alive.”

However, good government is not the same a good politics, especially if there is an election on. Taking away free home visits from homeowners makes the system fairer in that it equalises treatment of people who go into a care home with those who have care in their own home. Under the present system, the first group have to contribute if they own property, whereas the second group do not. Making the second group contribute saves the taxpayer about £1.3bn a year, allowing more money to be spent on people who may need it more, but it is electoral poison.

In order to try to draw that poison, the Prime Minister proposes a cap that would disproportionately benefit the better-off and that would probably cost more than the savings in the manifesto policy. A cap at £72,000 would cost the taxpayer about £2bn a year. Given how complicated social care is, it seems unlikely that today’s change will reassure people.

As I say, she has made a bad policy worse.