Health secretary Jeremy Hunt says proposals will save families from selling homes to pay for care, but Labour says this will do nothing to address sector current crisis in funding care.
The government will announce plans today to place a £75,000 ‘cap’ on people’s lifetime liability for social care, which is over double what was recommended in the Dilnot proposal, and £25,000 over the mark that Dilnot has said would become ineffective for those on lower wages.
To fund this, the government will provide means-tested help with residential care costs for more people than previously which will cost £1bn a year.
Health secretary Jeremy Hunt has said that the scheme will theoretically prevent people from having to sell their homes in order to pay for care, which would help to protect their inheritance.
Under the plans, individuals assessed as having spent £75,000 on their long-term care (not including the cost of accommodation and food in care homes, which will remain means tested), at home or in a residential service, would have any subsequent care costs met by the state.
The plans also include for the means-tested threshold for 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.
The reform would come into force in 2017 and would be enacted through the Care and Support Bill – which is currently in draft form; it would reportedly be paid for in part by freezing the assets threshold at which families become liable to pay inheritance tax for three years from 2015.
Speaking on the BBC’s Andrew Marr Show yesterday, Hunt said:
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.
As Conservatives, we want to help people who have done the right thing, who have saved.
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.
These proposals have been criticised by the opposition, and by campaigners, who say that this will not solve any of the problems with money being put into the care system, and will just force people to rely on a system of paying insurance instead of saving.
Labour’s Liz Kendall, shadow care and older people’s minister, said:
This would be a small step forward for some people who need residential care in five or more years’ time, but it won’t be fair for people with modest homes.
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.
Stephen Burke, director of social enterprise United For All Ages and 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, said:
These proposals are very timid and just a drop in the ocean.
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 National Pensioners Convention general secretary Dot Gibson said:
The social care system needs urgent and radical reform, but these proposals simply tinker at the edges.
The current system is dogged by means-testing, a postcode lottery of charges, a rationing of services and poor standards and nothing in the plan looks like it will address any of these concerns
Setting a lifetime cap on care costs of £75,000 will help just 10 per cent of those needing care, whilst the majority will be left to struggle on with a third rate service. Using inheritance tax or money saved from the state pension system simply won’t raise enough money to bring about the change that’s needed.
The commission who originally proposed the idea, chaired by economist Andrew Dilnot, suggested a cap on care costs set of between £25,000 and £50,000, ideally £35,000 to be most effective.
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.
This was rejected by the Treasury as too expensive and after months of deliberating ministers have decided to set a limit of £75,000.