August 1 2014 Latest news:
Joseph Watts, Political editor
Monday, February 11, 2013
Behind the closed doors of Whitehall a battle has been raging between the Department of Health and the Treasury in recent months.
Departments are always trying to squeeze as much funding as possible out of the chancellor, but this particular fight is possibly the most prescient given the impending crisis which faces the UK.
It is all about how we as a country, the state and individuals, are going to pay the burgeoning costs of elderly care in the future. With an aging population the problem becomes more serious by the day.
Currently anyone with assets greater than £23,250 covers the cost of their own care; a system which has seen 40,000 individuals forced to sell their homes annually to pay the bill. Meanwhile, the state foots the massive and growing cost for supporting those with few assets.
The Dilnot Commission, tasked to solve the problem, recommended that anyone with assets exceeding £100,000 should meet the first £35,000 cost of their own care, after which the state would pick up the estimated £1.7bn bill.
Until now ministers have failed to agree on Dilnot, with the UK’s decrepit public finances at the back of their minds.
But today they will set out proposals following the commission’s broad thrust, though with different numbers. Indications are that individuals will be made to pay the first £75,000 of their care, rather than the £35,000; the cap suggested by Dilnot.
That would mean the overall cost of the plan for the Treasury dropping from £1.7bn to about £700m in the first year.
North Norfolk MP and health minister Norman Lamb said he could not reveal details of the plan prior to today’s announcement, however he claimed it would mark a “historic moment”.
He said: “This is an essential reform that has been delayed for far too long and I’m very proud of the fact that the government has grasped the nettle.
“There is a lot more reform that has to go along with this, but the combination of these plans and other changes we are making through the Care and Support Bill are very significant.”
But the toughest question for ministers in both this government and the last has been how they would meet the cost.
Assuming the indications are correct, Treasury officials will have to find money to pay for the care of individuals who have spent £75,000 themselves already and for others who do not have assets worth £100,000; those who rely on the state for 100pc of their care.
Earlier this year at the Liberal Democrat conference Mr Lamb told the EDP the country must accept tax rises or spending cuts to meet the bill.
At the time he highlighted several possibilities. One which could raise £600m annually, was the removal of capital gains tax relief on the sale of deceased individuals’ estates.
Another possibility is means testing benefits pensioners receive, like free TV licences and the winter fuel allowance, which the Institute of Fiscal Studies estimates could save £1.4bn.
These are tricky political decisions, however, and there had been signs that the coalition would delay releasing details of how their proposals would be paid for.
But the EDP now understand there will be some details presented today indicating how the costs will be met, and these details will be written into the Care and Support Bill which the government hopes to pass in the next parliamentary session.
Liz Kendall said: “To really improve care for the elderly and disabled people the government needs to tackle the care crisis that’s happening right now as well as putting a system in place for the future.
“Dilnot put forward a very broad package of proposals - raising the means tested threshold, putting the cap up to between £25,000 and £50,000, with a recommended level of £35,000 for example.
“If the government wants to deliver a fair deal it needs to do all of those things in its announcement on Monday.”