The Government announced last month that it intends to introduce reforms to the way in which the elderly pay for care costs in England. It aims to ensure that no one who has worked hard throughout their life will be forced to spend all of their savings or sell their home in their lifetime to pay for care.
Scotland and Wales have their own care regimes, but the issues involved in the English reforms are of interest across the UK.
At the moment, only those with assets of less than £23,250 and low income receive help from the State with their care costs in England. On top of this, there is no cap to the total amount that people are expected to pay, meaning that they can receive huge bills, forcing them to eat into savings or sell their home in order to pay for the care required.
The Government commissioned a review in July 2010, to look at how best to protect people in England from high and unpredictable social care costs.
The Commission on Funding of Care and Support was chaired by Andrew Dilnot. It published its report in July 2011, recommending, among other things, that:
- Individuals’ lifetime contributions towards their social care costs – which are currently potentially unlimited – should be capped. After the cap is reached, individuals would be eligible for full state support. This cap should be between £25,000 and £50,000 – with £35,000 being thought a fair figure.
- The means-tested threshold, above which people are liable for their full care costs, should be increased from £23,250 to £100,000.
The Government has now published proposals for reform, which it says will provide unprecedented support for the elderly. These proposals differ slightly from the Dilnot recommendations. They include:
- A cap of £75,000 on social care costs. Currently, almost 1 in 5 older people face care costs over £75,000.
- A new means test threshold of £123,000, which the Government says is the equivalent to the £100,000 proposed by Mr Dilnot, at 2017 prices.
- Free care to be given to those who turn 18 with eligible care needs;
- A lower cap for people who develop care needs before retirement age; and
- From April 2015, no one will have to sell their home in their lifetime to pay for residential care, with those unable to afford the fees given the right to defer paying during their lifetime.
According to the Government, the cost of the reforms will be met in part by extending the freeze on the Inheritance Tax threshold at £325,000 by three years. This has caused some controversy, as it contradicts earlier pledges to increase the inheritance tax threshold.
The remainder will be funded from extra headroom created by private and public sector employer National Insurance Contributions associated with the end of contracting out as part of the introduction of the Single Tier Pension, says the Government.
The reforms have received a somewhat lukewarm reaction.
According to think tank Demos, the £75,000 cap means that an extra 120,000 elderly people a year will receive no relief on their social care costs. It might also impact heavily on couples; as the cap would be applied to both members as opposed to individually, potentially leading to total care costs of £150,000.
The National Pensioners Convention (NPC), meanwhile, has described the government’s plan to reform social care funding as “about as credible as a Findus Lasagne”, because it lacks sufficient funding to tackle the problems that pensioners face.
“Setting a lifetime cap on care costs of £75,000 will help just 10% of those needing care, whilst the majority will be left to struggle on with a third rate service,” said Dot Gibson, NPC General Secretary. “The government needs to be much braver and bolder if it is really going to sort out the problems – otherwise in a few years’ time we’ll be back again having another look at the issue.”