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Higher cap on care costs is no help to majority, warns Labour Higher cap on care costs is no help to majority, warns Labour
(7 months later)
The average person in social care will not benefit from raising the cap on care home costs to £75,000, Labour has warned.The average person in social care will not benefit from raising the cap on care home costs to £75,000, Labour has warned.
As the government pledged to end the "scandal", in which people have to sell their home to pay for social care, the shadow social care minister, Liz Kendall, said most people would die before they could benefit from the new cap.As the government pledged to end the "scandal", in which people have to sell their home to pay for social care, the shadow social care minister, Liz Kendall, said most people would die before they could benefit from the new cap.
Jeremy Hunt will announce on Monday that the government will introduce a £75,000 cap on the costs of social care – excluding the costs of accommodation and food – in April 2017. The health secretary will also raise the threshold on assets below which patients are eligible for state help, from £23,000 to £123,000. The cap is to be funded by freezing the threshold for inheritance tax.Jeremy Hunt will announce on Monday that the government will introduce a £75,000 cap on the costs of social care – excluding the costs of accommodation and food – in April 2017. The health secretary will also raise the threshold on assets below which patients are eligible for state help, from £23,000 to £123,000. The cap is to be funded by freezing the threshold for inheritance tax.
The £1bn package of measures is in line with the principles, though not the exact recommendations, of the Dilnot report into long-term care. The Oxford economist recommended a cap of £35,000 on the amount individuals are expected to pay for care when they become elderly and infirm before the state steps in.The £1bn package of measures is in line with the principles, though not the exact recommendations, of the Dilnot report into long-term care. The Oxford economist recommended a cap of £35,000 on the amount individuals are expected to pay for care when they become elderly and infirm before the state steps in.
The annual cost of the scheme will be funded in two ways. Most of it – 80% – will be met from extra national insurance contributions paid by employers when the single-tier pension is introduced. The remaining 20% will be met by freezing the inheritance tax threshold, at £325,000 since 2009, for three more years until 2019.The annual cost of the scheme will be funded in two ways. Most of it – 80% – will be met from extra national insurance contributions paid by employers when the single-tier pension is introduced. The remaining 20% will be met by freezing the inheritance tax threshold, at £325,000 since 2009, for three more years until 2019.
Hunt told the Andrew Marr Show on BBC1: "We have a scandal at the moment that every year 30,000 to 40,000 people are having to sell their houses to pay for their care costs. Around 10% of us end up paying more than £100,000 in care costs.Hunt told the Andrew Marr Show on BBC1: "We have a scandal at the moment that every year 30,000 to 40,000 people are having to sell their houses to pay for their care costs. Around 10% of us end up paying more than £100,000 in care costs.
"If you've got dementia, which is going to affect a million people in the next few years, you have this double whammy. You are trying to cope with this incredibly difficult condition, the loss of your memory, the impact on your relationships with your family. And then you have the double whammy of having to sell your home. That is what we want to sort out.""If you've got dementia, which is going to affect a million people in the next few years, you have this double whammy. You are trying to cope with this incredibly difficult condition, the loss of your memory, the impact on your relationships with your family. And then you have the double whammy of having to sell your home. That is what we want to sort out."
But Kendall said the £75,000 cap would not kick in for four years, by which time the average person in care would have died. The average length of time in social care in a BUPA home, funded to the tune of 70% by the state, is two years.But Kendall said the £75,000 cap would not kick in for four years, by which time the average person in care would have died. The average length of time in social care in a BUPA home, funded to the tune of 70% by the state, is two years.
She said: "If the cap is set at £75,000 it will take people four or more years before they hit the cap. The vast majority of people in residential care homes would have passed away before that happens."She said: "If the cap is set at £75,000 it will take people four or more years before they hit the cap. The vast majority of people in residential care homes would have passed away before that happens."
Kendall worked out the costs on the basis of the average local authority rate for social care at £480 a week. Dilnot recommends that this is discounted by £7,000 to £10,000 a year for the costs of accommodation and food.Kendall worked out the costs on the basis of the average local authority rate for social care at £480 a week. Dilnot recommends that this is discounted by £7,000 to £10,000 a year for the costs of accommodation and food.
This means that £150 a week would be subtracted from the £480, giving a weekly figure of £330 that counts to the £75,000 cap. This would not be reached until after at least four years in care.This means that £150 a week would be subtracted from the £480, giving a weekly figure of £330 that counts to the £75,000 cap. This would not be reached until after at least four years in care.
Hunt said the £75,000 figure made it easier for financial companies to provide policies for people who want to take out insurance against social care costs. "Actually we don't want anyone to pay anything at all," he told the Marr Show. "By setting an upper limit to how much people have to pay, then it makes it possible for insurance companies to offer policies for people to have options on their pensions so that anything you pay under the cap is covered."Hunt said the £75,000 figure made it easier for financial companies to provide policies for people who want to take out insurance against social care costs. "Actually we don't want anyone to pay anything at all," he told the Marr Show. "By setting an upper limit to how much people have to pay, then it makes it possible for insurance companies to offer policies for people to have options on their pensions so that anything you pay under the cap is covered."
But Kendall said Nick Starling, director of general insurance and health at the Association of British Insurers, had dismissed this idea. He told the health select committee in November 2011: "I do not think there will be pre-funded products. That is unlikely. I speak on behalf of the insurance industry, but I bring independence in the sense that, except for the immediate needs annuities which [Chris] Mr Horlick [of Care Partnership Assurance] provides, there are no products out there. I am not grinding a particular axe about particular forms of products. I am saying that, in a sense, we have a chance to think in quite an open way, unencumbered by a whole forest of products already out there. In that sense, the thinking we have been doing on this is independent."But Kendall said Nick Starling, director of general insurance and health at the Association of British Insurers, had dismissed this idea. He told the health select committee in November 2011: "I do not think there will be pre-funded products. That is unlikely. I speak on behalf of the insurance industry, but I bring independence in the sense that, except for the immediate needs annuities which [Chris] Mr Horlick [of Care Partnership Assurance] provides, there are no products out there. I am not grinding a particular axe about particular forms of products. I am saying that, in a sense, we have a chance to think in quite an open way, unencumbered by a whole forest of products already out there. In that sense, the thinking we have been doing on this is independent."
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