An ageing population which is living longer, which is increasingly geographically separated from younger family members, and is more likely to be diagnosed with conditions such as Alzheimer’s. Parkinson’s, dementia etc. Add in a financial crisis, and you have a recipe for politicians and the elderly to get very worried, encouraged by moderate headlines such as “Death tax plan will rob 4 million of inheritance”. So no wonder Andrew Lansley’s holding operation last week on the issue of funding social care generated a lot of comment, much of it adverse.

 

I am afraid this is another area of politics where the media shows a less than perfect grasp of the complexity of the issues, and seems to prefer a sensational headline to mature discussion of the matter. So a little historical context to the current situation would not go amiss.

 

Like so much of the modern Welfare State, the advent of social care in the UK had its origins in the wartime Beveridge report and was introduced by the post-war Attlee Labour government. The 1948 National Assistance Act placed a duty on local authorities to “provide … residential accommodation for persons who by reason of age (or other factors) are in need of care and attention which is not otherwise available to them.”

 

However, right from the start it was clear that such accommodation had to be paid for, and the minimum charge was set five shillings (25p) below the level of the old age pension to allow occupants of residential care homes to pay for their care and have a margin left over as ‘spending money’. This margin is now £23.50 per week. There was thus, contrary to what parts of the media might have us believe, never a ‘golden age’ in which free universal provision of residential care was the norm in this country.

 

The 1972 Local Government Act watered down the requirement for local authorities to provide residential care from a duty to a power, and subsequent decades have seen an effective privatisation of residential care in the UK, with direct local authority provision being replaced by a plethora of privately run homes. The costs associated with provision on this basis have led local authorities to seek to recover some of those costs from those in residential care. Currently, anyone with savings in excess of £23,250 has to pay for their care, with a key issue being that this figure includes the value of their residence unless they have a partner still occupying the property.

 

This specific area has become a minefield, with planning to forestall care charges by making lifetime gifts of residential property to other family members a particularly controversial area. The legislation provides that houses given away are still assessed if the gift is a deprivation of resources for the purpose of reducing the charge for care, but that definition begs as many questions as it answers, particularly as there can be other valid reasons for such gifts. Local authorities are also notoriously inconsistent, and sometimes downright capricious, in applying this legislation in practice.

 

The current financial crisis has focused attention firmly on the issue of care, which accounts for around half of total council expenditure, and thus appears likely to bear the brunt of forthcoming cuts. In anticipation of this the coalition asked economist Andrew Dilnot to look at the issue of future funding for social care, but unfortunately they appear not to be totally enamoured of his conclusions on the matter.

 

The Dilnot Commission’s report recommended a £35,000 cap on the lifetime costs of care for an individual, at an estimated annual cost of some £1.7 billion. It also recommended an increase of the £23,250 wealth threshold for residential care recipients to £100,000. However, Health Secretary Andrew Lansley has deferred a decision on these issues, possibly for up to two years. Among the alternative options that the government is considering is increasing the level of the cap, perhaps to £75,000, or asking people to opt in to the cap by paying an upfront fee (the alternative being unlimited costs). It was proposals along these lines that led to the emotive ‘death tax’ headline quoted above.

 

On the face of it, the latter proposal looks like introducing a further significant element of uncertainty into an already fairly random equation; I have to say that I am not sure that asking people to gamble on whether they will need residential care at some time in the future is necessarily a good social care model; I should say in this respect that I have had significant experience of the vagaries of the care funding system in the past 7 years with both my mother and grandfather.

 

The real problem with deferring this decision for up to two years is that I am not sure that it can afford to be deferred. The Local Government Association said that the plans “simply paper over the cracks”, and also:

 

“Council leaders are disappointed that the white paper does not address the reality of the current and growing funding crisis”;

 

and

 

“We are concerned that under the proposed timetable, elderly and disabled people, as well as carers, could face at least a further 5 years of uncertainty”.

 

The King’s Fund think-tank was quoted as saying:

 

“The government has failed to produce a clear plan”;

 

and

 

“There is a financial vacuum at the heart of these proposals.”

 

Age UK said that:

 

“Sadly, the delay on a funding decision will undoubtedly have a devastating impact on those currently in need of care support today.”

 

Some decisions on social care were announced, including a scheme for interest bearing loans to pay care home costs for those ineligible for state funding, the capital of the loans to be recovered from their estates after their death. There will also be national standards setting out who is entitled to help at home and residential care places, replacing the current situation (a ‘postcode lottery’, as the media would no doubt call it) whereby each council sets its own eligibility criteria for care of the elderly and disabled.

 

Some statistics at this point would probably help to emphasise just what a big issue this is, and how much bigger it is going to become:

 

  1. Number of people aged over 65

 

Year Number (millions)  
     

1985

8.5

Actual

2010

10.6

Actual

2035

16.1

Estimated

 

  1. Number of disabled adults aged under 65

 

Year Number (millions)  
     
2010 3.1 Actual
2030 3.4 Estimated

 

  1. Places in care homes in the UK

 

460,000 places in care homes in the UK, of which less than half are state-funded.

 

  1. The cost of care in England

 

Number of people receiving care Over 65s 18 to 64s
     
2005-06 1,231,000 518,000
2010-11 1,064,000 510,000
     
Annual cost to the state    
     
2010-11 £9.4 billion £7.1 billion

 

This does not reflect a reduced need for care, but the impact of councils ceasing to fund care for those with low and moderate care needs, typically help with eating, dressing and washing in their own homes. Fewer than half as many councils (28 compared to 60) funded such care needs in 2010-11 as in 2005-06. I strongly suspect that the upshot of this, and of intensifying pressure on council budgets, will be that the standard eligibility criteria mentioned above will mean people in those 28 council areas losing funded care as opposed to others gaining it. One should perhaps read the following words from Andrew Lansley in that context:

 

“Our plans will bring the most comprehensive overhaul of social care since 1948 and will mean that people get the care and support that they need to be safe and to live well so they don’t reach a crisis point.”

 

To demonstrate the massive economic impact of care in the UK, a few final statistics:

 

Over 65s

 

500,000 people pay for their own care

 

800,000 people who need it go without care or rely on friends and family

 

The average lifetime cost of care is £30,000

 

10% of over 65s will have to pay at least £100,000 for care over their lifetime.

 

18 to 64s

 

1 million people rely on informal care at home

 

1 in 6 carers give up work or reduce their hours

 

The cost of this to the economy is estimated at £1.3 billion

 

40% of carers have put off medical treatment for themselves because of their caring responsibilities.

 

My firm, Simpson Burgess Nash, sees first hand the impact of many of the issues relating to care on the lives of our large client base of those who have suffered serious personal injury or clinical negligence, and who typically require high frequency, levels and standards of care. Although they are fortunate in the sense that their care packages are funded by court-awarded damages, those awards are not intended to be overly generous in terms of the provision of care. Many clients have to rely on family members giving up jobs and businesses to provide the care they desperately need, and many of these family carers devote their entire lives to their loved ones willingly and without complaint. We therefore have a powerful insight into the many issues in this complex area.

 

This is a huge problem, and it will not be made any better by dithering over the solution, however politically unpalatable it might prove to be. It seems to me that there is no realistic alternative to those who can afford to, paying for their care, and whilst this unpalatable fact might not play well in the Conservative heartlands, or sit comfortably with John Major’s cascade of wealth down the generations, it nonetheless remains an uncomfortable truth that needs to be grasped sooner rather than later.

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