The Prime Minister has given his backing to new reforms on social care funding which will set a cap on the amount that elderly people will have to pay towards their own care.
A year-long review, led by economist Andrew Dilnot, is recommending that there is a cap of £35,000 that the elderly will have to pay for their own care costs during their lifetime. The state will then pay a standard rate for any costs which are above that limit. Treasury figures indicate that the total figure could reach £2.5bn a year, rising to an estimated £5bn a year within the next decade.
David Cameron has welcomed the Dilnot proposals but the government is expected to take a long period of time to study the report and will use the time to try and build a cross-party consensus on how to pay for the reforms. It is thought that the options will be to either raise taxes or to cut spending in the next Comprehensive Spending Review in 2013. The government’s formal response may come in the shape of a white paper by the end of the year but any new system is unlikely to be in place by the time of the next election, due in 2015.
The state funding would be only for costs related to care, so people would still be liable to pay for their own accommodation and food although these will also be capped, at £10,000 a year. The review is also calling for a substantial increase in the threshold of savings above which the state offers no help with care costs. The current figure is £23,250 but it proposes that that should be increased to £100,000.
Mr Dilnot has said that the need for change in the way social care funding is paid for is a “once in a lifetime opportunity” while Health Secretary Andrew Lansley has said that the issue of how the proposals will be paid for will be crucial in terms of the government’s ultimate response. He said: “It is very important that an engagement around social care issues embraces not only the questions of what it is desirable additionally to provide to give people greater security but also how those are to be paid for and there are opportunity costs associated with anything which entails additional public expenditure.”
Fears have also been expressed as to whether council grants may fail to cover the full cost of a residential home place. Under the proposals councils will be able to set their own rates for grants that will be provided once the elderly have reached the £35,000 limit and there are concerns that only “basic” grants will be provided which will not meet the full costs of a care home place.
