How are the Tories proposing to change the funding of social care?
Theresa May said she wanted to be honest about the “difficult decision and trade-offs” that the country faces as she unveiled a plan to make older people and their families pay more of the costs of social care.
She unveiled plans to change the care system with three “connected” measures that expand the current system of charging for those looked after in residential homes to those who who are looked after in their own homes.
At the moment people who are looked after in residential homes must pay for their care if they are judged to have assets worth more than £23,250 and those assets include their property.
The thinking behind this was mainly practical. The person affected must leave their home to obtain the care they need and the care is very expensive. This justified the forced sale of the main residence. Thousands of people every month are forced to sell their homes to pay for residential care under the scheme.
Those people who are able to stay in the home receive domiciliary care. Until now they have had to pay if their savings total more than £23,250, and their property was excluded.
Care is free when an individual’s total savings fall below a lower limit of £14,250 with a sliding scale of contributions towards care costs between the lower and higher limits.
Under the new scheme, those people who use residential and domiciliary care will face the same charging structure. They will be assessed to get a picture of their finances and if their combined savings and property are valued at more than £100,000, they will need to pay for their care.
If they want to hang on to their home, they can defer payment. The state will deduct the cost from their estate when they die. Local authorities already offer a Deferred Payment Agreement (DPA) which allows people to secure care fees against their home once the property is sold, which can be on their death, or sooner, if they choose. The cost includes interest payments charged by the council.
What is the scale of the problem?
The House of Commons library noted in March that the overall adult population grew by 10% between 2001 and 2011 but the number of adults aged over 65 grew by 11% and those aged 85 rose by 24% in the same period. People aged over 85 are most likely to need care. A report by King’s College London said the number of people dying from dementia is expected to rise from 59,000 in 2014 to 219,000 in 2040.
How have the Conservatives tried to resolve the funding problems in recent years?
A social care precept was introduced to allow local authorities to increase council tax levels – initially by up to 2% extra, later by up to 3% – while reforms to a housebuilding scheme freed up a further £240m for an “adult social care support grant” for 2017/18.
What problems did the government encounter when trying to raise funds via other methods?
The chancellor, Philip Hammond, sought to raise £2bn for social care by hiking national insurance contributions for the self-employed. But this was scrapped within days, amid claims it broke a 2015 manifesto pledge to cap the main tax rates. The government has scrambled since then to find an alternative.
Are the details of the scheme spelled out?
It is not clear whether an interest rate will be applied to charges if payment is delayed until death. It is not clear how care will be provided when it is largely carried out by foreign-born labour and the manifesto pledges to cut immigration to the tens of thousands. It is not clear how people receiving care will be protected from over-charging by private domiciliary care providers, which may seek to exploit clients who can pay more once their home is included in the calculation of savings and wealth
The Tories are likely to to face criticism for making those people unlucky enough to lose out in the lottery of serious illnesses in old age being penalised again by having all their assets above £100,000 being sequestrated by the state.
Caroline Lucas, the co-leader of the Green party, was among many to call the move a “dementia tax” because someone with dementia who stays at home or enters residential care could find that their suffering is multiplied by state charges of between £200,000 to £300,000 after a four- or five-year stay.
Social services chiefs have warned that the new charges could discourage the elderly from seeking support from their local authority, preferring instead to wait until they need nursing care, which is free under the NHS.
In the 2015 election, when the Labour party put forward plans for a surcharge on estates to pay for social care, its plan was based on everyone sharing the cost.
The Conservatives said a 15% “death tax” in addition to the inheritance levy of 40% on estates worth more than £330,000 could mean a levy of £46,000 for the average Briton.
The Tories said the Labour plan penalised families with large homes or other substantial assets.
Jeremy Hunt, the health secretary at the time, said pensioners “deserve better” than a “secret tax bombshell”.
Opposition spokesman Andy Burnham, now the mayor of Manchester, said a tax on estates which everyone contributes to would act as “insurance” for people who fear punitive care costs when they get older.
Sir Andrew Dilnot’s major report in 2011 suggested a £35,000 cap on care costs. His plan encouraged individuals to save towards long-term care costs, but the government scrapped the plan, believing it would be difficult to persuade people to save in addition to setting aside funds for a pension. Dilnot said the new Tory approach meant they are “tackling completely different questions”.
In essence, those who suffer the most debilitating long-term illnesses will lose the most from May’s initiative while those who win in the health lottery will win big, especially as the inheritance tax threshold for a couple is due to rise to £1m.