Friday, 15 February 2013

Reform to Elderly care costs

Finally a government has had the courage to address the issue of the cost of elderly care: I am proud we have taken the bold step of doing the right thing for people who have worked hard and saved all their. Every year more than 30,000 people have to sell their homes to pay for the cost of care. The current system, which only provides state support if your assets are above £23,250, is unfair and sends out completely the wrong message – that if you work hard, save for your future and want to have something to pass on to your loved ones, your savings can disappear in a puff of smoke if you end up needing long term care. As one in three of us will get dementia and one in ten end up with more than £100,000 of care costs, this is a problem a responsible government cannot ignore.

The new reform package includes from 2017:
•A cap on care costs at £75,000. The intention is not that people should pay the £75,000, but that they should not have to pay it because they can cover it through, say, an option in their pension plan. Only with the certainty of knowing there is an upper limit to costs will pension companies or insurance companies offer this.
•Increasing the threshold for financial support from £23,000 to £123,000. This will help strivers on low incomes who may have saved and bought a house for which a potential £75,000 cost could still mean losing it.
The package will cost £1 billion a year by the end of the next Parliament, from which around 20% of the cost will come by extending the freeze on the threshold for Inheritance Tax. This is right because overall these proposals offer a much stronger way of protecting inheritances people have worked for all their lives - by allowing them to make provision so a family home is never at risk, something that currently is not possible.
We have now delivered in just two years what Labour ducked for 13 years. We can be proud we will be perhaps the first country in the world which, in the face of an ageing population, is building a system where people plan and prepare for their care costs as much as they plan and prepare for their pensions.


  1. When I first heard the Dilnot Report had a figure in it of £35000, I thought that a bit low, thinking this was the sum below which no estate could be further depleted by care costs in the final years. But it turns out this was the sum, now adjusted to £75000, recommended as the maximum that anyone would have to pay towards these costs. This means that expressly (for self-serving purposes and for re-election) the government is condoning the practice of large amounts of wealth being passed from one generation to the next. Instead of a person’s estate being regarded as his or her nest egg, precisely against the possibility of needing to pay for care in old age, it is being regarded as the just inheritance of children. This, of course, flies in the face of the much vaunted principles of meritocracy, of everyone competing on a level playing field, and introduces the concept of the ‘undeserving rich’ (to counter the contrary notion of the ’undeserving poor’, much bandied about in relation to social security benefits).

    Then, there is the question of the phrase ’worked hard and saved all their lives’. A moment’s thought makes one realise that some, and sometimes quite a lot, of this ‘hard-earned wealth’ derives from inherited property and investments, that, over a previous lifetime, may have been lightly taxed or tax-avoided altogether. And the conveniently moral idea that effort and hard work correlates with the extent of wealth is confounded by the fact that many jobs demand long and strenuous hours with little to show for it, while other jobs, held usually by educated, articulate, quick-thinking and assertive individuals, arrogate to themselves hyper-inflated salaries, privileges, perks, pensions and bonuses. This is because salaries are determined by self-contained markets and not how hard you work.

    People do not, from the outset, work hard during their lives so they can bequeath to their children. The motivation is to be successful, secure, respected, and fulfilled in their own right, and to enjoy the fruits of a family and social life. Only much later (if at all), does the motivation switch to being well-remembered by one’s children.

    Jeremy Hunt points to the ‘scandal’ that some elderly folk are having to sell their homes to pay for care, while others are not, according to the ‘lottery’ of their respective health needs in the final years. This is a clear indication that the £75000 cap is chiefly concerned with guaranteeing an inheritance (I suppose, by the same sort of token, how many children there are amongst whom a family fortune must be divided, or whether the parents led prodigal lives should also be counted a scandal or lottery?). The more money left in an estate for the benefit of heirs, the less money is available to government to provide good quality care to the elderly who can’t afford it. This is another and more convincing kind of scandal, to my mind.

    We hear constantly about the widening gap between the rich and poor, implying this is something to bemoan and to rectify. Yet these proposals accentuate this very gap. Whatever other causes of unfairness there are in life, there is a chance in principle to start afresh with each new generation, but inheritance sabotages this. Obviously, no-one is going to stop this natural, visceral act of self defence within families, unless they are a Marxist. But there is a battleground in all of us, between looking after ourselves on the one hand, and caring about the plight of humankind and beyond on the other. It is personally very unattractive therefore to hear politicians and others complacently trying to disguise this fact, dressing up really quite base human motives with a dignity they do not deserve. If only some way could be found to be more honest about this less flattering aspect of our natures, then we might find it easier to bring about the more balanced society, which most of us want, one of greater understanding, compassion and generosity towards our fellows.
    Paul Attree

  2. Cost of care in the country has been the issue of financial advisers and healthcare specialists among baby boomers. It has been that way since news broke that the figures of home care and long term care facilities are going to double in 2026 and quadruple in 2030. It’s good to know that there are still people in the LTC industry who can manage to make positive predictions such as Medicaid getting to save $28 billion in 2030 as private insurance owners increase by 29%. Find out more about it on

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