As the long term care sector continues to bask in political prominence, Stephen Burke clarifies the main issues for Paul Robertson
It is a given that sectors in financial markets work within a framework formed through the various pressures impacting on the product group. For the majority the biggest impacts will be regulation and market forces. Certainly no sector has pressures that the long term care sector has.
An intense and intensifying political debate is impacting on a system that nobody would say is working well and which many feel is close to crisis point as inexorable demographic forces crush against fragile finances. However the sector shapes itself in future it is likely to hold a space for the provision of financial advice, but what we need now is some clarity of the issues outside the political wrangling.
Talking to COVER as the election debate raged Stephen Burke, chief executive of Counsel + Care agreed to give a non partisan overview.
Counsel + Care is a national charity, working with older people, their families and their carers to give them the best care and support available. This is done in two ways: to the individual, generally through their family or carer, as they are usually at a point of crisis, or through undertaking policy and campaigning work.
Burke says: "The big focus of our work has been the future funding of care; recognising that the current system is underfunded, seen as unfair, clearly not working for a number of old people and their families and as unsustainable. We need radical reform, both a new care system and a new way of funding it to keep pace with our ageing population."
The charity has been campaigning around the green paper the government published in July 2009 and the white paper in March 2010 and what the new Government will be doing to take that forward.
So what are the demands of a new system and, possible more realistically, what can it expect? Counsel + Care is not talking about a system being fully state funded but argues that expectations are growing all the time.
"People are more consumer minded and will not put up with what they perhaps would have in the past. Services must become more personalised and flexible to respond to individual needs. This presents a challenge: how will we deliver and fund this? There is consensus on what type of system we need but much less on how we pay for this," says Burke.
The charity is in favour of a comprehensive care service, where people get the care they need free at the point of delivery. However, it recognises we are a long way from that, and that in the interim we need to look at a number of solutions.
Burke says: "There are moves to making the care for those with the highest needs free for those in their own home. The next step, at least in the white paper, is that those in residential homes for more than two years will get free care.
"In the interim there are roles for all sectors. People need to access the right sort of financial products to pay for their care, but even looking to the future, the white paper talks of people only getting free care costs, not accommodation costs. Therefore people are still going to need to access financial products to pay."
As with any sector dealing with infirmity, prevention is seen as incredibly important. Burke believes society needs to intervene much earlier than it does, getting people living more healthy and active lifestyles into later life.
"But we also need to recognise that the number of people with dementia will be rising dramatically and that we will have more people living longer with a disability or long term condition. We need to be realistic about the demographics here; this will happen regardless of intervention," he adds.
The Big Plan
He has a three part plan: "The next Government must ensure that reforming care remains a priority. I don't think any Government could escape this, it is widely recognised as failing and the need for change is understood.
"The second thing is to define a vision for the new system. How do we define family carers? What is the role of housing? It boils down to one question, what can an older person expect in terms of care and support, no matter where they live in the country?
"One of the biggest issues is the postcode lottery and any new system has got to address that within a national framework of entitlements, locally delivered.
"The third part is obviously how we are going to pay for all this. There has been a move to set up a cross party commission on this to look at the various options on the table. We will obviously have to see whether this idea is taken up."
As ever, one of the main blocks is going to be financial. The country is only just crawling out of recession and party politics aside, there are limited means available for any solution on the table. So is the solution already hamstrung by the economy?
Burke thinks not: "There are two things any Government can do. The first is to make use of the existing resources; how we use technology and how we invest in prevention. I am convinced that the current spend on social care could be stretched further.
The second is how do you get extra funds into the care system. It is at this point that some kind of compulsory levy comes in and the big challenge is; what is the best way of asking people to make a contribution?"
Centring on the fault lines
Any solution will take time so worries centre on the fault lines in the present system that may precipitate a crisis. One of the biggest issues is older people approaching the councils and just not getting the care and support that they need. This can have three outcomes: people will go out and buy their own care, alternatively they will rely on family carers, or thirdly, they will struggle on without any help at all.
"We are likely to see a ground swell of discontent over this matter. The real financial pressure on the system is going to hit in 2012 -2013. There will be a real increase in pressure on central government then to increase the pace of reform," says Burke.
Ramifications
So what are the ramifications for an IFA? Burke thinks the sector could have good news for advisers. Burke's view is of a collective method of funding with certain entitlements people would get wherever they are in the country. "Most care would still be privately or independently provided by the private sector or a third sector. It is just about the method of bringing extra money in and ensuring consistency," says Burke.
Interest in this sector is growing for a number of reasons. The awareness of the demographics is higher than ever; secondly the media and political debate on the future of care has really taken off as people increasingly become aware of what is at stake. The third thing is the clear economic drivers because the current system is not sustainable.
"The role of financial advisers in all this is absolutely critical," says Burke. "There are people out there making some bad decisions. People could make much better uses of their resources if they knew their options."
Those that move into residential care need good advice on the range of financial products that could be used to potentially save them and their families a lot of money, and which could also prevent those people becoming the responsibility of the local authorities and thus a drain on the public purse.
Burke notes there are a lot of people making these decisions without any advice; quite often in a tight time frame. This happens particularly when people are in a hospital and cannot return to their own home, so choose a care home without the level of advice they would really need on their options and the financial products they could access.
Perverse incentives
Burke adds: "In addition there may well be perverse incentives on local authorities if they understand that someone has their own resources and could pay for residential care if they were placed there. What would be the impact of the free care in the home bill if it went through? Rather than local authorities picking up the bill for care in the home they might encourage people to move into a care home."
There is no doubt the current generation needs to be encouraged to plan ahead. One of the benefits of a national care system is that it would enable everyone to contribute and create a certainty that wherever people live they would get the support they need.
We need to look at those in their 40s and 50s who perhaps have elderly parents, who could be doing well if they thought about their own care at the same time, rather than leaving it until 40 years later in life," says Burke. "People ought to start thinking about this issue as early as possible but certainly in their 40s and 50s. Many people do some pre-retirement planning but tend to focus on pensions and omit the broader aspects of later life.
"This is not only about care, but about housing options as well, it is all about changing the culture in this country, in the role that older people play in society, and attitudes to age. It is all bound up together. Given the increases in longevity, the number of people over 85 is going to continue to increase"
It would seem long term care is a sector to keep an eye on.
