Dilnot report set to call for more spending on care for older people
The Dilnot report on funding older people’s care is expected soon. Will politicians take up its likely proposal for the state to contribute more?
When Andrew Dilnot was interviewed by Society Guardian last autumn, his personal interests were listed in one word: “numbers”. Reading this, one of his daughters told him he was a very sad man. But it is the economist’s obsessive mastery of figures that, by lunchtime next Monday, will have enabled him to deliver to government on schedule, and to likely acclaim, a blueprint for meeting the challenge of funding the care and support of our rapidly ageing population.
Whether that blueprint will be acted upon is another story. The recent history of attempts to reform care funding in England and Wales does not inspire confidence. But there is a powerful sense that this is the last chance for a generation to rationalise the complex, confusing and fundamentally unfair patchwork of existing entitlements.
In one respect, the timing could be better. Dilnot’s plan will certainly call for extra state spending – a requirement much more problematic today than during Labour’s years of plenty. Unsurprisingly, mumblings of discontent are already emanating from the Treasury. But in another respect, the timing is good. There has been a sudden focus on social care over the past month, as a result of the plight of the Southern Cross care home group and BBC Panorama’s exposure of abuse of people with learning disabilities at a private residential unit. The spotlight is on the way in which society supports vulnerable people.
In addition, Labour is offering “a fair wind” to the coalition for the process of taking on Dilnot’s recommendations. Although recriminations persist, not least about the Conservatives’ notorious “death taxes” poster campaign, politicians of all parties accept that the pre-election collapse of the last attempt to find a consensual way forward on care was not their finest hour.
There is universal agreement that the current funding system is broken. According to charity Age UK, fewer than 1.2m of the 2.9m older people in England who have care needs receive any help from their council. Thanks to a mix of retrenchment and ageing, things are about to become more inadequate still – by 2014-15 there will be something like twice as many people aged 85 or over as a decade before, whereas public expenditure will be lower.
The tangle of rules governing who gets what is not merely inadequate, it is also incomprehensible. There is a nationwide means-test, but it works differently for residential and community care. Then there are separate restrictions on who gets support depending on the severity of need, but the application of these varies wildly between councils. It is tough indeed for anyone planning for old age to have any idea about what they will get from the state.
Simplifying the terrain is essential, but the big story next week will centre inevitably on whether people should sell their properties to fund lengthy stays in care homes. There is real public anger about this, as laid bare in opinion survey findings published yesterday by housing and care charity Anchor. The survey, of 2,000 people by ICM, found that only 8% would willingly sell a home they owned to pay for care in later life. As many as 44% thought the government should cover all care costs for older people. Yet only 14% would pay higher taxes to fund it, while just 6% said they were saving for care in old age.
Dilnot, principal of St Hugh’s College, Oxford and former director of the Institute for Fiscal Studies, was brought in by the coalition 12 months ago to lead a commission to square this circle and produce recommendations within a year. His fellow commissioners have been Dame Jo Williams, chair of the Care Quality Commission, and Lord Warner, the former Labour health minister.
Their single biggest challenge is explaining how desperately-needed resources might be levered in to care amid these straitened times. The strong speculation is that they will do so by proposing a partnership deal between the state and the individual, whereby the former will fund any care costs above a cap of perhaps £35,000 in return for the latter agreeing to save, take out insurance cover or – failing both – spend capital on bills up to that level.
It could be a tough sell. But Dilnot has a supremely cool head on his shoulders. He is disinclined to use words such as “crisis” in connection with long-term processes such as society’s ageing. Indeed, he has frequently pointed out that the growing number of pensioners is merely the continuation of a trend we have been muddling through for a century. A man of sunny disposition, his past writings have emphasised the several-fold increase in real incomes which new technologies afforded over the past 100 years, and he is most unlikely now to settle for the argument that the country cannot provide affordable care for all.
Varying costs
The nub of the problem rapidly identified by his commission is the wildly varying costs that people incur for care. Research for it suggests that around one in four of us might expect to die with no care needs, and that for half of us the costs will be below £20,000. As long as there is a safety net for the poor, planning and saving would allow many families to meet this sort of bill. The real difficulties arise with the remaining one in four whose care costs exceed £50,000 – sometimes by very many times over.
Furthermore, these figures exclude accommodation and food costs in residential homes, which can be as much again. The average total bill facing all 65 year olds was calculated for the commission at £50,300. One in five actually faces a total care bill of more than £100,000 and one in 100 of more than £300,000.
Other catastrophic financial risks are managed through some form of insurance, whether social or private. In the case of our houses burning down, we look to the market for cover. If costly cancer care is needed, we fall back on a health service that pools everyone’s risk by taxing the well to provide costly care to the minority who need it. The risk of requiring an income into exceptional old age is insured against by the mix of private and public pensions.
When it comes to care, however, there is virtually no insurance at all above the social safety net. Private financiers blame uncapped liabilities, and myriad unknowns. Imagine, for example, that some medical breakthrough suddenly allowed a whole cohort to cling on to frail life for longer, scuppering actuarial assumptions about prolonged care being a costly exception that averages out in the wash. Such prospects send such a shiver down the industry’s spine that it would only ever offer comprehensive cover for care, in return for sky-high premiums.
With a cap of £35,000, however, insurers might happily cover this defined liability, since they would know that was the limit. On the explosive question of family homes, this proposal would at least restrict liability to a fraction of a typical property, thereby ensuring homeowners with the biggest bills were left with something substantial.
So, what’s not to like? Some will hanker for free care, but after Labour failed to use its crushing majority to deliver this in line with the 1999 Sutherland royal commission – which led to a partially free scheme only in Scotland – even campaigning charities are not holding out for that this time. Besides, data cited by the commission show that half of households headed by someone aged 55-65 have wealth in excess of £200,000 – much of it tied up in bricks and mortar. Such is the need for extra resources that few experts would want to exempt entirely property that has made many baby boomers rich.
The objection will be less with principle than practice. In particular, older people will want reassurance that they will not be forced to sell their home while they are alive. In theory, this guarantee is already in place, since local authorities are meant to accept a stake in the home as payment for residential care, and then realise this through posthumous sale. In practice, town halls do nothing to encourage take up, since they are barred from charging interest under this scheme, so people are left having to sell their homes while they are still living.
One devilish detail to watch out for on Monday is whether the commission has bright ideas that might make this deferred payment work better, and likewise whether it can encourage better equity release products to allow homeowners to release some of the value of their home. Another is whether Dilnot will find a way to smooth the cliff edge of the current means-test, which snatches all support away from anyone with assets exceeding £23,250, exactly the sort of distortion that reliably riles economists. A third detail is the scope of the cap. Will it cover the total costs of residential homes, including board and lodgings or will it – as seems more likely – exclude these “hotel bills”?
And what exactly would the state pay above the cap? Anyone imagining a blank cheque for a top-of-the-range home is likely to be disappointed: the subsidy would likely only cover costs to a specified weekly limit.
On the other side of the argument, some voices fear a cap could give too much away. The Labour peer Lord Lipsey, who served as a dissenting member of the Sutherland commission and was instrumental in thwarting its implementation, is one. While generally supportive of Dilnot, he insists: “A cap most benefits the rich as it represents a smaller proportion of their wealth. It should not be set too low, else they will be paying too little towards their care, and the taxpayer too much.”
Political mines
As they decide how to take the report forward, ministerial minds will be less worried about perceptions of the rich getting off lightly than about cost. A well-designed cap would cost a few billion pounds a year, a fraction of 1% of national income but a tough ask in a tax-weary, cuts-strewn country. Early on, some commission watchers felt it might stumble into fields littered with political mines in the hunt for cash. Raiding the kitty for the universal disability benefit attendance allowance was once considered a likely recommendation, and some even speculated whether hotel charges for long-term NHS patients could be on the table. As publication approaches, however, such whispers have fallen quiet. The onus looks like being on the Treasury to pick up the tab.
The remaining question, then, is whether the chancellor can be persuaded to agree. He will be assured that implementation would be unlikely until 2014 or even 2015, by which time his master plan for clearing the deficit is due to have been completed. If he is confident of his own strategy, he can hardly object.
