Fresh Cabinet split as Health Secretary 'warns Theresa May against plan to cap care costs'

In a letter seen by the Telegraph, Mr Hancock told the Prime Minister that he was "concerned" that the cap - which could cost up to £3.4billion and is set to be included in the Government's long-delayed social care green paper - would benefit the wealthy over average earners.

The limit would see people pay a maximum of £100,000 for their care over their lifetime, excluding the cost of accommodation.

But, in a letter to the Mrs May this week, he warned that the proposal "confers a significant benefit to the well-off at the expense of the general taxpayer", adding that "raising taxes is likely to be the most promising choice to fund this".

Mr Hancock also suggested in his letter that he backed a radical new system of insurance to fund care of the elderly care modelled along the lines of the auto-enrolment pension scheme.

Under the "opt-out" scheme, money is automatically deducted from people's pay to cover the cost of their care in later life. 

Mr Hancock said in his letter that the Government has done "enough to assure ourselves" that there is a "workable model for voluntary insurance".

He also called for the green player to include plans for a compulsory premium deducted from the earnings of the middle-aged and over 65s to fund the cost of their care in older life.

The Health Secretary said: "Without this option we leave ourselves exposed to criticism that we have ducked the issue of sector sustainability that many are hoping funding reforms will address."

Under England’s care system, those in residential care currently face losing all savings and assets - including the value of their house - down to their last £23,500.

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