The Cap on care cost will help very few families

Tim Pethick, Managing Director of Saga Magazine explains the impact of the care cap and how a society that insists on providing care for less, will eventually get a system that cares less.

The Government’s decision to cap how much the elderly must pay for their care is a well-intentioned move, but one that shifts the problem rather than solves it.

At first glance, its response to the Dilnot Commission report was seen by many, including Andrew Dilnot himself, as a step in the right direction.
The principle of a cap – set at £75,000 – that limits the amount each person needs to pay for their own care was welcomed, as were the changes to the means test by which people qualify for state-funded care.  By lifting this from £23,250 to £123,000, an estimated additional 100,000 Britons will receive care without having to sell their homes to pay for it. 

This certainly sounds like a win for middle Britain and indeed, Health Secretary Jeremy Hunt was quick to laud it as one.  He asserted: Britain is “to be one of the first countries in the world which creates a system where people don’t have to sell their own house” to fund their care.
But the plan may create tragically false expectations  because it fails to address the impact it will have in practice.   It means that local councils will have to pay for hundreds of millions of pounds-worth of care that they are not already funding.

The Government hasn’t provided details of how money will be provided to local councils for this, or whether it will be ring-fenced for care - but we are certain their coffers are bare.  So too are the Councils’, who are under more pressure than ever to cut costs.  Indeed, one local authority leader predicted that the new cap will add 50% to his authority’s care costs. This, when his overall budget has seen a 30% cut in three years!
The knee-jerk answer is to squeeze the fat out of local council care, making it better, more efficient.  But this is impossible.  I know, because I’ve tried.

Until recently I ran the largest provider of domiciliary care for the elderly in Britain. For Allied Healthcare, our largest clients are local councils who pay for the team of 18,000 carers and other staff to look after the at-home needs of more than 35,000 elderly people.

By their nature, these carers are dedicated and kind, many with vocational or nursing qualifications.  Depending on the needs that the councils identify, carers like ours visit the elderly to cook meals, help with medications, assist with personal care and do anything else that helps to keep them out of care homes for as long as possible.  Yet this care in the UK is delivered by some of the country’s lowest paid workers.  In many cases, they are already on the minimum wage.

This kind of service has already been so squeezed by the cost-cutting, that the demands on the system impose that in many cases home visits are now reduced to 10-15 minute slots.  There is not an ounce of fat left to cut.  It is a shameful commoditisation of care, which benefits no one, least of all those who need the care.

In Britain we often pay our carers less than we pay those who stack shelves in supermarkets.  No wonder recruitment is a problem.  A society that places so much pressure on providing care for less, will eventually get a system that cares less.

So who will pay, and who can?  First, it helps to unpick the Government’s plans and look at what they will really mean.

The £75,000 cap is a backstop in case of catastrophic care costs.  In reality, few of us will ever reach this level.  The average length of stay in a residential care home is 2.5 years, costing around £16,000 a year for the care costs alone, this does not include food and accommodation costs. 
Before we go to a care home, most of us could have some form of professional help in our own homes first.  Of course, everyone prefers this to moving to a home and the beauty is, it costs councils much less.

Whatever combination of help we get, whether it’s at home or in a residential home, our typical lifetime cost of care is £50,000 (excluding accommodation costs) – well short of the £75,000 the Government proposes.

The proposed Dilnot cap of £35,000 would have provided real relief for many more thousands of elderly people who would qualify for State-funded help much sooner.  Alas, we also know that the Government cannot possibly fund this, and nor can councils.

So if the individual can’t pay without selling their home, the next grand idea is to push the cost to private enterprise – the insurance industry.
Surely, the Dilnot report suggested, the new cap would create a market for us all to buy insurance policies to fund our costs of care.
Theoretically, this is a good idea, and at a cap of £35,000 may even have worked. But who is able to do it when the cap is £75,000?  At Saga, the nation’s specialist insurer for the over 50s, we estimate the insurance premium for a 50-year-old would be £140 per month, rising to £700 a month for an 80-year-old.  At a time when many middle-aged and elderly people are already cash-strapped, how many are going to stump up another £140 a month for something they will probably never need? 

This brings us straight back to the original problem: who will pay?  No one likes the answer but the truth is, we will, with our homes.  There is no other way.

The Government has already thought of this.  One way it proposes to fund some of the cost of the cap is by freezing inheritance tax thresholds.  So, if you don't spend the equity in your home on your elderly care, your children may lose it in inheritance tax.

Either way, we need a radical change in the way we think of our homes.  For centuries, we have believed that leaving property to our children is sacrosanct; the only meaningful legacy of a life lived successfully.  In turn our children, and indeed their mortgage lenders, now dependent on the promise of this windfall to pay down a chunk of their debt.  They might argue that they can’t afford for you to spend their inheritance.

Already, however, this view is starting to shift, chiefly because many pensioners have no choice.  A growing number of people now see their home as an asset, like a pension or investment, whose value they can draw on as they age. Indeed, last year 18,000 people freed up some £925 million cash for themselves through equity release schemes.

If more of us get used to this, we will start to be able to fund the care solutions we want for our parents, and ourselves.

It’s the only way we make caring a profession and a career choice for more people, and the only way to lift some of the burden from family care givers.  It’s also the only way we can fund more imaginative strategies to allow people to stay in their own homes for longer.

The yardstick for any society is surely this: what kind of care do we want for ourselves and our loved-ones?  Of course, it is care that is appropriate for our needs, and then delivered with compassion, dignity and respect. 

This sounds like an epic task – but the Dilnot report, for all its weaknesses, is a start on the right path to achieve a social care system that makes us proud by putting care at its heart.

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