Does the Social care White paper tackle the Crisis in Social Care? Peter Barnett asks the questions
In the UK, the number of people aged over 65 is projected to rise from 10.1million to 16.7million over the next 25 years, by then nearly 25% of the UK will be aged over 65.In the UK, about 1.8m people get state-funded social care - a third are adults with disabilities and two-thirds older people.
More than £14bn is spent on social care by councils, but once inflation is taken into account, funding has hardly changed in the past seven years.
Estimates state that public spending on social care will need to triple over the next 20 years to keep pace with the ageing population and already over half of NHS spending in Britain is on people over 65. 2 million older people currently need care services but do not receive any services, nearly 500,000 people are paying their own costs and another 800,000 are estimated to go without formal care despite being in need of help.
The average lifetime cost of care is £30,000, but for one in 10 it will total £100,000.
At some point we all will face the important issue of how and who pays for this care and a year down the line from their publication, the Government today has issued its response to the Dilnot and Law Commissions reports on the funding of adult social care and the regulatory framework surrounding it.
Dilnot proposed that should they need care an individuals' lifetime contributions towards their social care costs should be capped at £35,000. After the cap is reached, individuals would be eligible for full state support.
The £35k limit of lifetime personal liability is irrespective of where care is received and does not include accommodation costs in residential care and these should be set at a maximum of £10k per annum. The means-tested threshold, above which people are liable for their full care costs, should be increased to £100,000.
The ‘partnership' model Dilnot recommends strikes a fair balance between individual and state and ensures that the highest costs, which frequently occur at the end of life, will not fall on individuals and their families.
The capping of care costs could provide a major opportunity for behaviour change and to inform and advise people and could facilitate the development of a range of affordable financial products for many people, while shielding some individuals from potentially financially catastrophic costs.
Dilnot was not universally welcomed however and it has been alleged that the individual cost cap of £35k and lower limit of £100k savings, would not cover all care costs and may still leave some older people still facing huge bills.
His proposals were criticised for being regressive and failing to meet either current unmet needs or future growth in demand for care and giving insufficient emphasis to joined up care and health and the promotion of prevention and intervention.
Alongside the White Paper, a draft Health and Social Care Bill was also published for consultation, as was progress report on funding.
While the principles behind Dilnot were accepted, no decision will be made this side of the 2013/14 Spending review and further discussions will take place around the balance between universal funding, individual opts-in or out and payments before and after the event.
This delay is very disappointing and will I am sure be widely criticised by older peoples organisations. 800,000 older people are not receiving the care they need now as fewer than 14% councils currently provide care to those with ‘Moderate' needs.
A separate document on regulation was published which announces that a national minimum eligibility threshold will be created which LA's will be obliged to follow and assessment portability will provide assurance that care package continuation will be accepted in other localities.
Other announcements included that £200 million will be made available over 5 years to provide 6000 ‘supported' housing units for older people.
I make that £33k for land plus buildings each - enough? In addition, where will the land be found - apart from miles out of town? In the S. East, for example developers can't find sufficient land now at viable prices?
From 2015, individuals, instead of having to sell their home while they are alive, will be able to get a loan from their Local Authority (LA), which can be repaid from their estate after death, either by selling their home or by the heirs re-mortgaging the property.
Such a "universal deferred payment" scheme for care homes already exists and councils have been able to offer interest-free loans to people who face having to sell their home to pay for care. However, their availability varies significantly throughout the country.
Most local authorities will only provide loans to those with few savings and, in the past year only about 8,500 have been offered.
The new scheme will ensure councils do provide such loans and they will be able to charge "nominal" interest - probably in line with inflation - so that it does not cost them money.
Details will be negotiated between the Government and local authorities in the coming months, and the level of interest payments is likely to prove crucial. However, loans may not stop families having to sell their home to pay for care.
They will simply delay the sale and how will the ongoing care home tariffs for self- funders, particularly those with limited capacity or advice, be protected against the risk of unfair cost increases as cross subsidy with publicly funded residents whose fees won't be similarly increased.
There are initiatives ensuring that the needs of carers are assessed by LA's and their legal rights enshrined. Powers will also be given to allow people far more control over their own care through personal budgets and direct payments.
Thus latter does throw up the issue of capacity, local availability of choice, quality and the potential for financial abuse.
Support will also be given to early intervention and prevention so that hopefully more people will be looked after independently and with dignity in their own homes, where previously they would have been prematurely forced into residential care.
Lastly £300m will be found to support improved joined up integration between Health and Social Care and new ideas like volunteering credits and ‘social impact' bonds will also be looked at..
So what is here for Financial Services? Hopefully the legislation that will ensue from the white paper and draft Bill consultation outcomes will lead to the establishment of a base level for Care quality and Delivery Standards.
If successful this would allow the true costs of care to be revealed and then a public discussion needs to take place as to how exactly those costs are to be funded and by whom and when?
In the short term, until the funding model is crystallised in 2014 around the Government being the provider of last resort - the basic philosophy of Dilnot - and precisely what individuals and their families are expected to contribute to their care is made clear, it is hard to see how manufacturers of advisers can confidently create and advise on products and services without knowing what degree of public services and support they have to complement?
The omens are not good - Dilnot estimated the cost of his plans at £1.7bn but many people feel a more realistic figure is nearer £3bn and a key issue is where are the Treasury going to find this money in a recession?. In order to trim the costs and so in the interim I would expect the Dilnot numbers to be reviewed.
For example, the cap could be set higher say £50K and the means testing limit lowered, to say £80K. As part of that funding decision, in another part of the landscape it is very hard to see, despite many reiterations to the contrary, that the Government's current stance on the permanence of older people's universal benefits, such as bus passes, TV licences and winter fuel allowances, can survive the introduction of some form of means - testing. Similarly the continued existence of Attendance Allowance and Disability Living Allowance in their present form seems very unlikely.
In the meantime, older people's aspirations are increasing, with a desire to live at home independently and with dignity for as long as possible, exercising greater choice and control over their care. This will mean greater demand for accessible housing and neighbourhoods to maximise the quality of life of all residents, including those with physical disabilities, sensory needs or dementia.
One solution has to be improved availability of, and access to, advice and greater consideration given to combining LTC insurance with life insurance, impaired life annuities, critical illness, equity release and Pensions etc plus the provision of some coherent link with working age health and wellbeing products and services.
Corporately the treasury departments of LA's will need support with both the set-up costs and the spreading of the capital cost and equity recovery risks of these deferred loans. LA's will also need support around delivery of improved front line advice and information (LA's are to be given £32m to fund these services). IFAs are perfectly placed to assist in delivering this advice and should engage locally with their social service and health departments regarding its deployment.
However, nothing will happen on funding until 2013/14 at the earliest and in the meantime, 150,000 older people will enter the care system per year. Of whom 40% will be self-funders, many of whom will continue to deplete their capital, and just like their forebears, they and their carers/relatives will continue to struggle with the complexities of the current system and ever tightening restrictions on access to care. All of which lead to confusion, loss of dignity and a feeling of great helplessness and unfairness.
Importantly older individuals should not wait but should be encouraged to seek advice now as to how these changes could impact, for better or worse, their health and financial outcomes in old age. Informed advice and support is now needed more than ever and Financial Services is perfectly placed to deliver that ahead of the potentially daunting challenge of developing a products, services and advice envelope to complement the comprehensive but limited public care offering that will hopefully emerge 18 months or so down the line.
As a member of the advisory Board of the Society of Later Life Advisers (SOLLA), I believe raising the current low levels of consumer trust and confidence has to be our first priority. Therefore, I would urge all of us to take the opportunity now presented to engage with the White Paper consultation and work alongside the ABI to promote the valuable and worthwhile contribution that Financial Services can make both to this debate and to bringing about better health and wellbeing outcomes for both older people and the wider population.
Peter Barnett is a policy adviser in the House of Lords, an advisory board member of The Society of Later Life Advisers, and chair of the Continuing Care Conference
