Joseph Watts, Political editor
Saturday, January 5, 2013
Since 2010 the government has been under pressure to come up with a specific plan setting out how the country will pay for the cost of elderly care.
With an aging population the problem worsens by the day and all political parties agree it needs to be tackled fast.
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 the Dilnot plan, with the UK’s decrepit public finances at the back of their minds.
But next week the coalition will announce its long awaited mid-term review, and speculation is rife that specific legislation, to be passed before 2015, may be brought forward.
The minister responsible for the matter is the Liberal Democrat North Norfolk MP Norman Lamb, whose own constituency has a high proportion of aging individuals.
Speaking to the EDP yesterday he would not confirm whether any announcement would be made, but he added: “What I think we need to have is a commitment to legislate. We also need clarity on the level of the cap so that everyone knows what we are talking about.
“Meanwhile, Dilnot argued not only for a cap, but also that the threshold for income support should go from £23,000 up to £100,000.
“That’s another significant point that should be clarified.”
But what about the key sticking point; how to pay for it all. Earlier this year at Lib Dem conference Mr Lamb told the EDP the country must accept tax rises or cuts to meet the bill.
At the time he highlighted several possibilities to be considered. One which could raise £600m annually, was the removal of capital gains tax relief on the sale of deceased individual’s estates.
Another possibility is means testing benefits pensioners currently get like free TV licences and the winter fuel allowance, which the Institute of Fiscal Studies estimates could save a further £1.4bn.
Former Lib Dem health minister Paul Burstow this week suggested the government could restrict the winter fuel allowance to just those individuals receiving the pensions credit.
Whatever the final decision, it will form a heated political battleground; something indicated by ministers’ reluctance to spell out the financial decisions behind the issue.
Mr Lamb even suggested legislation committing the government to tackling elderly care could be brought forward and passed before 2015 without ministers specifically saying how they would be paid for in the first instance.
He said: “The way I argue it is that we first need to get the government to commit to dealing with the issue, binding the government’s hands.
“The truth is that the costs of Dilnot in the overall scheme of things, in terms of total government spending, are not that significant.
“You can get a hang up on having to find a particular funding stream at this point, but the most important thing is to get the government committed to legislation.
“Then in phase two you can say, ‘ok, this is the cost, let’s see how we can work it out.”
Shadow health minister Liz Kendall said the first issue government should deal was an immediate £1.3bn gap in care funding for the elderly caused by recent cuts.
Meanwhile she said Labour supported the Dilnot proposal of raising the threshold at which people start paying for themselves. But she argued cutting benefits elsewhere was not the right way to fund any new elderly care system.
“The idea of saving money from means testing the winter fuel allowance, by saying that you only get it if you receive the pension credit, is flawed,” she said.
“There are over a million of the poorest pensioners who don’t even claim the pension credit. You would effectively be taking winter fuel money away from some of the poorest, to subsidise care for the better off.”
Ms Kendall declined to say exactly what Labour’s plan would be for meeting the costs, instead arguing the government should renew talks with the opposition to reach a cross party consensus.