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Jeremy Hunt says austerity to blame for higher cap in social care costs Jeremy Hunt says austerity to blame for higher cap in social care costs
(7 months later)
Ministers were accused of acting in an "unambitious miserly" way after the health secretary Jeremy Hunt blamed economic austerity for the decision to offer a less generous state contribution to covering the costs of social care.Ministers were accused of acting in an "unambitious miserly" way after the health secretary Jeremy Hunt blamed economic austerity for the decision to offer a less generous state contribution to covering the costs of social care.
As Labour accused the government of taking only a faltering step away from the current "cruel lottery" in the care system, the centre-left thinktank Demos released figures which showed that nearly 120,000 elderly people would lose out under the new system.As Labour accused the government of taking only a faltering step away from the current "cruel lottery" in the care system, the centre-left thinktank Demos released figures which showed that nearly 120,000 elderly people would lose out under the new system.
Hunt blamed challenging economic circumstances for the decision to reject the recommendation by the Oxford economist Andrew Dilnot for the government to cap the costs of social care at £35,000. The government will instead cap the costs at £75,000 from April 2017 at an annual cost of £1bn to be funded from employer contributions to the new second tier pension and extending a freeze in inheritance tax to 2019.Hunt blamed challenging economic circumstances for the decision to reject the recommendation by the Oxford economist Andrew Dilnot for the government to cap the costs of social care at £35,000. The government will instead cap the costs at £75,000 from April 2017 at an annual cost of £1bn to be funded from employer contributions to the new second tier pension and extending a freeze in inheritance tax to 2019.
Hunt told MPs: "Whilst there are many other things that need to be done to prepare for an ageing population, these reforms herald a historic change in the way that care and support is funded in this country. The economic circumstances are challenging. But these commitments demonstrate our determination to help people who have worked hard, saved and done the right thing to prepare for the uncertain hand that fate deals to all of us in old age."Hunt told MPs: "Whilst there are many other things that need to be done to prepare for an ageing population, these reforms herald a historic change in the way that care and support is funded in this country. The economic circumstances are challenging. But these commitments demonstrate our determination to help people who have worked hard, saved and done the right thing to prepare for the uncertain hand that fate deals to all of us in old age."
Dilnot, whose commission called for a cap of between £25,000 to £50,000 with a recommendation of £35,000, expressed disappointment but said that it would not undermine the principles of his system.Dilnot, whose commission called for a cap of between £25,000 to £50,000 with a recommendation of £35,000, expressed disappointment but said that it would not undermine the principles of his system.
"It is higher than we would have wanted – £11,000 higher than the top end of our range – and I regret that but I recognise that the public finances are in a pretty tricky state," he told the Today programme. "It doesn't seem to me that it is so different from what we wanted as to radically transform the basis of the system.""It is higher than we would have wanted – £11,000 higher than the top end of our range – and I regret that but I recognise that the public finances are in a pretty tricky state," he told the Today programme. "It doesn't seem to me that it is so different from what we wanted as to radically transform the basis of the system."
Demos warned that the higher cap would mean that only 16% of those aged over the age of 65 would benefit, rather than the 37% who would have benefited if the Dilnot commission had been accepted in full. This is a difference of 117,096 based on figures from the 2011 census.Demos warned that the higher cap would mean that only 16% of those aged over the age of 65 would benefit, rather than the 37% who would have benefited if the Dilnot commission had been accepted in full. This is a difference of 117,096 based on figures from the 2011 census.
Claudia Wood, deputy director of Demos, said: "For the coalition to consider putting the cap at £75,000 is unambitious, miserly and will do little to solve one of the most vital social problems facing our generation. A cap of £75, 000 means that the majority of people will still be paying just as much on their social care as they would have before the cap."Claudia Wood, deputy director of Demos, said: "For the coalition to consider putting the cap at £75,000 is unambitious, miserly and will do little to solve one of the most vital social problems facing our generation. A cap of £75, 000 means that the majority of people will still be paying just as much on their social care as they would have before the cap."
Hunt pointed out that Labour had failed to introduce any reforms despite commissioning a series of reports. He said that:Hunt pointed out that Labour had failed to introduce any reforms despite commissioning a series of reports. He said that:
• The £75,000 cap will be closer to Dilnot's upper recommendation of £50,000 because the new cap works out at £61,000 in 2011 prices – the year the commission published its recommendations.• The £75,000 cap will be closer to Dilnot's upper recommendation of £50,000 because the new cap works out at £61,000 in 2011 prices – the year the commission published its recommendations.
• People on low incomes will be helped after the government agreed to raise the threshold which prevented anyone with assets worth more than £23,250 from receiving any help. This will be raised to £123,000 from 2017.• People on low incomes will be helped after the government agreed to raise the threshold which prevented anyone with assets worth more than £23,250 from receiving any help. This will be raised to £123,000 from 2017.
Hunt said the changes would create greater certainty for older people who would find it easier to take out insurance to cover the costs of social care. "The system we have sends out the wrong message: that you're better off not saving for your future because any savings will only disappear in a puff of smoke," he said.Hunt said the changes would create greater certainty for older people who would find it easier to take out insurance to cover the costs of social care. "The system we have sends out the wrong message: that you're better off not saving for your future because any savings will only disappear in a puff of smoke," he said.
"By creating certainty that this is the maximum they will have to pay, they can then make provision through insurance or pension products so that they are covered up to the value of the cap, thereby reducing the risk of selling their home or losing an inheritance they have worked hard to pass on to their family.""By creating certainty that this is the maximum they will have to pay, they can then make provision through insurance or pension products so that they are covered up to the value of the cap, thereby reducing the risk of selling their home or losing an inheritance they have worked hard to pass on to their family."
Hunt's claim about the ease of taking out insurance was challenged by Labour which cited evidence by the Association of British Insurers to MPs that the capped cost model would not lead to a market for pre-funded care insurance.Hunt's claim about the ease of taking out insurance was challenged by Labour which cited evidence by the Association of British Insurers to MPs that the capped cost model would not lead to a market for pre-funded care insurance.
Andy Burnham, the shadow health secretary, said: "This plan is, at best, a partial solution. The government has prioritised the funding of a cap on care costs with new money over and above addressing the crisis in council care budgets. Vulnerable people will continue to face rising charges as councils put up fees to cope with the growing shortfall in their budgets making it more likely that they will, in time, have to pay right up to the new £75,000 cap. To many that won't feel like progress."Andy Burnham, the shadow health secretary, said: "This plan is, at best, a partial solution. The government has prioritised the funding of a cap on care costs with new money over and above addressing the crisis in council care budgets. Vulnerable people will continue to face rising charges as councils put up fees to cope with the growing shortfall in their budgets making it more likely that they will, in time, have to pay right up to the new £75,000 cap. To many that won't feel like progress."
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