Caring for the elderly – is cost-capping the answer?
06:30 12 February 2013
© ARCHANT NORFOLK 2012
A “landmark” government policy announcement will, for the first time, limit the amount of money which individuals will need to pay for care costs in their old age. But will the cap succeed in helping those who need it most?
To be forced to sell your own home to pay for your care home bills in old age is a cruel reward for a life-time of hard work and saving.
But the problem of how to meet the burgeoning cost of caring for an increasingly ageing population has become one of this government’s most significant policy challenges in a time of austerity.
Ministers yesterday claimed to have made the first steps towards defusing that economic timebomb, after formally announcing a £75,000 cap on the amount which any individual will have to pay for care in their old age.
Pensioners’ groups and campaigners agreed that the principle of setting a life-time limit on care costs was a welcome improvement on the current system of limitless bills – but some have questioned whether it has been set low enough to protect those who need it most.
Health secretary Jeremy Hunt declared the cap a “watershed moment” which will mean that, starting from 2017, no-one will pay more than £75,000 for their care costs. The state will pay the rest, at an estimated cost of £1bn per year.
Those with fewer assets and lower equity in their homes will pay less, as the threshold for state aid will also be increased from £23,250 to £123,000. That means thousands more people with will become eligible for means-tested government support which will count towards their £75,000 cap, and therefore lower their individual contributions.
But the cap itself is still higher than the recommendations of the independent Dilnot Commission, which suggested a figure of between £25,000 and £50,000.
As a result, the scheme is expected to benefit only 16pc of pensioners, and campaigners said many people could still be forced to sell their homes to meet the added cost of accommodation, food and heating – which are not included in the cap.
North Norfolk MP and health minister Norman Lamb said although not all the Dilmot recommendations could be met, he believed the cap was an important step towards a fairer system.
“We have got to deal with incredibly difficult financial circumstances but, despite that, we are reforming a rotten system, and that is something which has eluded governments until now,” he said.
“We can have a debate in future years about exactly where the cap should be set, but we are legislating now to make sure it is fairer and to give people as much help as we can on their care costs.
“It is a nightmare we are all facing but, given the financial constraints we are all under, I take the view that this is still a big advance when you are reforming what was a very unfair system.
“Scrapping the existing system which leaves people facing the fear of unlimited bills in their later years is the right thing to do.”
Mr Lamb said he had spoken to representatives from the insurance industry who had suggested the setting of a maximum liability for care costs would allow insurance policies to be developed to cover people against that risk.
He also said the £75,000 cap figure had been adjusted to account for inflation by 2017. At 2010/11 prices, as used by Dilnot, it would have been £61,000 – only £11,000 above the upper recommendation of the independent review.
“It is really critical that we compare like with like,” said Mr Lamb.
Thinktank statisticians at Demos calculated the plans will benefit 16pc of over-65s compared with 37pc who would have gained from a £35,000 cap, with the group’s deputy director Claudia Wood saying the £75,000 level was “unambitious, miserly, and will do little to solve one of the most vital social problems facing our generation”.
Phil Wells, chief executive of Age UK Norwich, said he believed individuals could still be paying anything up to £200,000 before state funding was activated, with living costs and accommodation not included in the cap.
“Very few people who own a house will also have £75,000 in the bank, so it is not really going to stop most people selling their homes to finance their care,” he said.
“The second question is that this does not increase the amount of funding going into care services – it only goes into the pockets of the children of those who would otherwise have to sell their homes. That may be fair. We are saying that people shouldn’t have to use their wealth to pay for this, but there is a balance between whether the government should be spending money on improving the quality of care.
“The important thing is that the framework is now in place, and that is really welcome. There will be arguments about the numbers, but there is a safety net now and an element of risk-sharing, so that people who get dementia in their 50s and spend a long time in care are not required to give up everything to pay for it.
“The big question is whether the government will adequately fund councils to implement the changes, when the number of us over the age of 85 is set to double in 20 years.
“It would be a disaster if, in order to protect the interests of those with significant savings, the proposals were to undermine the quality of care for all who depend on the public services.”
Shelagh Gurney, cabinet member for adult social services at Norfolk County Council, shared those concerns. She said: “It has been recognised for a long time that something had to be done to address how care is funded in England, so it is certainly welcome that the government is acting on this now.
“The cap is higher than I, and many other people, would have wanted. However, I do understand that the state of the economy and public finances mean that it would be difficult for it to be substantially lower at this time.
“If we look at this in the context of how people are currently expected to contribute to the cost of care, this announcement is a really positive step and will mean thousands of people in Norfolk will be able to protect many more of their assets.
“We have not seen the detail of how this new funding arrangement will work yet but we would certainly expect any additional costs to the council as a result of this announcement to be funded by central Government.
“What remains a particular concern for us in Norfolk is how we will fund the increasing demand on our social care services that is the inevitable consequence of our ageing population. We have a substantial and growing number of older people living in the county but we have had our funding from central government significantly reduced over the last two years.
“With further funding reductions likely over the next few years, how we can reconcile this is a worry for me and the council as a whole.”