Government finds £1bn a year to cap self-funders’ social care costs

The government has announced a £75,000 ‘cap’ on people’s lifetime liability for social care and means-tested help with residential care costs for more people, at a cost of £1bn a year.

Health secretary Jeremy Hunt said yesterday that the package would help families protect their inheritances and save people from having to sell their homes to pay for care; however Labour and campaigners warned that it would do nothing to address the funding “crisis” in social care.

From 2017, older people assessed as having spent £75,000 on their long-term care, at home or in a residential service, would have any subsequent care costs met by the state; board and lodging costs in care homes would remain means-tested but the government would recommend that they should be about £12,000 a year in 2017 prices. However, the means-tested threshold above which people receive no state funding for residential care would rise from £23,250 to £123,000, with payments calculated according to people’s level of wealth.

Care would be free for people who reach adulthood with an impairment and lower caps than £75,000 will be imposed on people who become disabled during their working-age adulthood.

No reform until 2017

The reform would be enacted through the Care and Support Bill – which is currently in draft form; it will cost £1bn a year by 2020, accounting for the increased numbers of people receiving state-funded care and higher numbers of assessments carried out by social care professionals. It would be paid for by freezing the assets threshold at which families become liable to pay inheritance tax for three years from 2015 and increased employer national insurance contributions.

Speaking on the BBC’s Andrew Marr Show yesterday, Hunt said his priority was to help families protect their inheritances and encourage people to save for their long-term care needs.

“We have a scandal in this country, that every year 30-40,000 people are having to sell their homes to pay for their care costs,” he said. “As Conservatives we want to help people who have done the right thing, who have saved.”

He added: “By setting an upper limit to how much people have to pay then it makes it possible for insurance companies to offer policies or for people to have options on their pension so that anything you pay under the cap is covered. We need to change the culture in this country so that, just as people make provision for their pensions in their 20s, their 30s, so we also need to be a country where people need to make provision for their social care.”

Proposals criticised by Labour

However, the proposals were criticised by Labour and campaigners.

“This would be a small step forward for some people who need residential care in five or more years’ time,” said shadow care and older people’s minister Liz Kendall.
“But it won’t be fair for people with modest homes.”

She added: “And these proposals won’t do anything for the hundreds of thousands of elderly and disabled people who are facing a desperate daily struggle to get the care and support they need right now.”

Her sentiments were echoed by Stephen Burke, a long-time campaigner for social care funding reform and advocate of funding adult social care through a tax on people’s estates after they die.

‘Drop in the ocean’

“These proposals are very timid and just a drop in the ocean,” said Burke, who is now director of social enterprise United For All Ages and consumer care ratings site The Good Care Guide. “The care system is already massively underfunded and by 2017 the care gap will be even larger. These proposals don’t inject extra funding into the care system – they just substitute some private spending with public spending.”

The Association of Directors of Adult Social Services (Adass) was more positive about the plan, saying it would “remove the risk of catastrophic costs of care falling on individuals in a way which was completely unpredictable and also uninsurable”.

But president Sarah Pickup also warned that it did not go far enough, including in meeting the government’s own aspirations to reorientate social care from a crisis-response service to one that promoted recovery and prevention.

“Adult social care services are currently under severe financial pressure and meeting the wider aspirations in terms of prevention and recovery – but also in terms of quality of and access to services – will require investment over and above the costs of implementing [these] reforms,” she added.

Dilnot commission

The government’s proposals are based on the 2011 report of the Dilnot commission, which had been tasked by ministers with identifying a sustainable way of meeting long-term care costs that helped people protect their assets.

The commission, chaired by economist Andrew Dilnot, proposed an extension of the means-test threshold to £100,000 and a ‘cap’ on care costs set of between £25,000 and £50,000, ideally £35,000.

Dilnot said a cap set above £50,000 “could mean people with lower incomes and lower wealth would not receive adequate protection”. Dilnot’s calculations were made according to 2010-11 prices; if implemented in 2017, a cap of £75,000 would be equivalent to £61,000 in 2010-11 prices.

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