Public spending will be cut by another £800million to pay for a cap on what the elderlypay for care, health secretary Jeremy Hunt will announce today.

The total anyone will have to pay for care will be limited to £75,000 from 2017. He will also raise from £23,250 to £123,000 the amount people can have in assets before receiving means-tested care. Pensioner care costs exceed £75,000 in about one in five cases.

The package will also see free care for those with eligible care needs when they turn 18.

The measures are expected to directly benefit an extra 100,000 who would not currently receive support.

‘The point of what we are doing is to protect people’s inheritances,’ Mr Hunt said. ‘The worst thing that can happen is that, at the most vulnerable moment in your life, you lose the thing you worked hardest for, that you saved for, your own house.’

To pay for the measures, which are expected to cost £1billion a year, the coalition will cut departmental spending by £800million, the equivalent of 32,000 police officers. The respected Institute of Economic Affairs said the move would hurt young working people.

Director general Mark Littlewood said: ‘It is bad economics and awful morality to claim that a cap can be put on the costs of social care.

‘As people live longer, we need to recognise that forcing young people to pay for the needs of affluent older people is deeply immoral.‘There should be no state-sanctioned cap on costs and we should reasonably expect those with high levels of capital, to use their own equity to pay.’