Care Fees: Time to deliver Dilnot says former care minister.

Paul Burstow MP has urged the government to defuse the elderly care fees “time bomb” by concentrating the winter fuel payment on the poorest pensioners and using the money saved to pay for a cap on care costs.

In a report published by the think tank CentreForum, the former care minister calls for the “appropriate legislative levers” to be inserted into the draft care and support bill so that the Dilnot Commission’s proposals on care financing can be delivered in full by the end of this parliament.

The report reveals that under the current care system elderly people who own averagely priced homes (£213,000) face losing 65 per cent of their assets to pay for care.

But it is argued that if the government introduced a £50,000 limit on the cost of care, with a £100,000 extended means test, then older people would lose just 22 per cent of their assets.

Paul Burstow said:

“Social care isn’t free but it could be a lot fairer for those who have worked hard all their lives.”

“Placing a cap on the amount people have to pay for care would protect people from the catastrophic costs they face now. But to make this vital and long overdue change, we have to find the money from somewhere.”

“By concentrating the winter fuel payment on those eligible for pension credit we can pay for a cap on care costs.”

In addition to Paul Burstow’s contribution, the CentreForum report ‘Delivering Dilnot: paying for elderly care’ includes articles from the Association of British Insurers, Partnership and former chair of the Royal Commission on Long Term Care of Older People, Lord Sutherland.

Chris Horlick, managing director of care at the health insurer Partnership, said:

“Self funders constitute 41 per cent of all elderly people in social care, yet they are among the most overlooked and poorly served in the social care system, which ironically they cross subsidise.”

“They suffer not only from a chronic lack of awareness of how to fund their long term care but also where to get appropriately qualified financial advice.”

“We believe this report will provide a valuable contribution to the care funding debate and ensure this critical issue is not lost in the long grass.”

NOTES TO EDITORS

Key recommendations from the report:

  • We propose ending the universal entitlement to the winter fuel payment and instead linking receipt of this benefit to those who receive pension credit. This would create savings of up to £1.5 billion each year – which we propose should be spent on reforming the financing of care.
  • This policy would incentivise those entitled to pension credit, but not receiving it, to begin claiming – as we would merge the winter fuel payment into pension credit, paying it as a lump sum at wintertime.
  • We believe that a cap of between £50,000 and £60,000 in 2015 prices is the most appropriate level of a capped system of care funding. This cap will work in conjunction with an increased upper capital limit of £100,000 and would ensure a fair and sustainable system of care financing.
  • We agree with the Institute for Fiscal Studies that the relief on capital gains tax at death should end. The current relief is a distortion in our tax code that is not justified, and it is a measure that would raise £600 million a year towards implementing Dilnot’s proposals.

The CentreForum report ‘Delivering Dilnot: paying for elderly care’ edited by Paul Burstow MP can be accessed via this link.

Response:

Andrea Rozario, Director General of the Equity Release Council, comments on the CentreForum report, Delivering Dilnot: paying for elderly care, published today (Thursday 3rd January 2013):

“We fully back CentreForum’s efforts to focus attention on the question of who pays for elderly care.  With at least half of people in the system required to fund all or part of their care, more must be done to help them access financial advice and avoid a scenario where their savings, assets and quality of life are eroded from the lack of an alternative solution.

“CentreForum’s proposals [for targeting winter fuel payments and capping the amount people have to pay towards social care costs] are well motivated by the belief that, as far as possible, someone who has worked hard to afford their home should not be forced to give it up to help fund their healthcare in later life.  Even without these reforms, however, it’s important to stress that releasing equity from their properties already offers many people a way to manage these costs without having to sacrifice their homes.

“Any measure encouraging local government to refer self-funders for care to qualified financial advisers would a real positive – helping people to make an informed choice about options such as equity release, and giving them access to professional guidance when they need it most.  We would welcome any move to make this a reality.”

Care Fees Update