1. Will everyone have to pay the £35,000?
No, not everyone would have to pay the full £35,000. In fact, we estimate that only a quarter of 65 year olds would reach the cap. People only pay for the care they need. But unlike the current system when someone could have to pay many thousands of pounds, under our proposals when someone had contributed £35,000 towards the cost of their care, the state would step in and cover all remaining care costs.
We also recommend that there should be additional support to help those who are less well-off to make their initial personal contribution. We propose that the current means-tested system stays in place, but that it is extended so that many more people can benefit. As a result many people with lower levels of income and wealth, would not pay the full £35,000 even if they have very high care needs.
2. Is this just for older people?
Our proposals cover all adults in England – from 18 years of age. We propose that those who are born with a disability, or who turn 18 years of age with an eligible care need, should receive all their care for free. This would mean that they would not be subjected to a means-test when they turned 18. We also think that people who develop an eligible care and support need before the age of 40 years of age should have their care funded by the state, as many people will not have had a chance to accumulate much wealth. After 40, we have suggested that the cap should rise in stages, up to 65 years of age when it would be £35,000.
3. How does the contribution to living costs work?
We are proposing that everyone who enters residential care pays a fixed contribution towards their general living costs. This amount will be the same for everyone – it is not intended to cover all costs, but be a realistic amount that people would expect to be paying for their general living costs. If people live at home they would be expecting to cover their food and heating costs; and we think it is appropriate that people make some contribution should they enter a residential care home. This would bring greater parity between different care settings.
We are setting this as a fixed amount so that people can plan and know what they will need to cover. It will also mean that care costs can not be disguised as general living costs.
Those who can not afford to make this contribution would still be covered by the means-tested system. We also suggest that the Government gives careful consideration as to how such a contribution would work for those of working age.
4. How will the metering work? Couldn’t some people just buy very expensive care and so reach the cap quicker than everyone else?
People would build up costs towards the cap based on a care package that the local authority would provide for them were they being directly financially supported by the local authority.
In effect, we are proposing that we meter ‘accumulated need’, rather than the amount paid by individuals. This means that wealthier people could not spend money more quickly to reach the cap more quickly. If people wish to spend more than that ‘notional’ package they could do, but it wouldn’t count towards their cap.
5. Is this targeting extra money at the better off?
Under our reforms, those with the greatest need would get support from the state.
This group includes people from across the income and wealth spectrum. The current system only offers support to the poorest, so moving to a more universal system would mean that some of the additional resources go to people who are not at the very bottom of the wealth distribution.
However, in addition to the universal capped cost offer, we also recommend that the means-tested system should be extended so that more people benefit, including some of the least wealthy homeowners, who currently get little or no protection if they go into residential care. The combination of the cap and the extended means test ensures that many people with more modest assets receive greater protection, and so would never have to use up £35,000 of their assets paying for care. The table below shows the maximum amount that people with different levels of wealth would have to spend from their assets, if they had high care needs.
Overall, the new system would be highly progressive and most of the money that local authorities spend would go to people in the bottom half of the wealth distribution.
6. Do our reforms just protect the inheritances of the rich?
Our proposals aim to protect people against the risks of very high care costs – and to make things fairer, to reduce fear and anxiety and to give people more certainty with which to plan and prepare.
Our view is that issues around inheritance of assets are best dealt with through the tax system, rather than the social care funding system.
7. Care costs differ across the country, is a flat rate contribution fair?
Under our proposals, people with identical levels of wealth living in different areas of the country would contribute the same amount, although it might take some people longer to make their contribution than others. As well as being fair, this approach is clear and simple, and makes it easier for the system to be portable.
People with high wealth would make a contribution of £35,000, wherever they live. However, the extended means test would ensure that people with lower wealth would not have to spend the full £35,000 out of their assets. This offers greater protection to those who live in areas of the country where property prices are lower.
In Burnley, the median house price is around £70,000. Someone with a house worth this much would not have to spend more than £18,000 out of their assets.
In Bristol, on the other hand, the median house price is £170,000. Someone with a house worth this much will make the full £35,000 contribution.
8. What happens next?
The Government has responded positively to our proposals. The Secretary of State for Health has said that the Government will now consult on social care reform, before publishing a white paper, and a progress report on funding, in spring 2012.
You can read the full oral statement from the Secretary of State for Health.