Social care: Jeremy Hunt's plans aim to bring 'greater peace of mind'

Health Secretary Jeremy Hunt: "These proposals represent a new era of support"

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Plans for a £75,000 cap on the amount the elderly will have to pay for social care in England will give people "greater peace of mind", Health Secretary Jeremy Hunt has said.

Mr Hunt told MPs the current social care system was unfair and left many families facing "ruinous" costs.

He also announced a rise from £23,250 to £123,000 in the amount of assets people have before having to contribute to the costs of basic nursing care.

Labour said progress was "modest".

At present, up to 40,000 people every year are forced into selling their homes because they face unlimited care bills.

The health secretary said many families currently faced "often ruinous costs...with little or no assistance from the state" and the proposed new framework, due to come into force in 2017, would bring "greater certainty, fairness and peace of mind".

Ministers may be giving themselves a big pat on the back for their changes to the social care system.

But for many involved in the sector this is just the start of the process.

Firstly, the £75,000 cap is more than double the figure recommended by Andrew Dilnot, the independent expert asked to look at the issue by government two years ago.

While publicly it is being welcomed - campaigners have been promised reform ever since Tony Blair came to power - there is a nagging fear that it is too high to really get people engaged with planning for their old age.

And, secondly, this reform does nothing to improve the quality of services currently on offer. It is purely aimed at preventing people having to sell their own homes to pay for care.

Local government has long argued the system is dramatically under-funded and services are suffering as a result.

Of all that some say needs to be done, the introduction of a cap may well turn out to be just the tip of the iceberg.

While costs vary hugely, it is estimated that half of all people turning 65 in future will have to pay up to £20,000 towards their basic nursing care - such as help to get washed and dressed - while, for one in ten, the figure will be above £100,000.

The government is proposing to cap the amount that anyone will have to pay in their lifetime at £75,000.

This figure would only cover the cost of nursing care and people would still have to pay for accommodation and food - although some support will be provided.

If the changes are approved, people are only expected to start receiving support above the £75,000 cap by 2019 at the earliest.

But the hope is that, by establishing the principle that the state will cover the really high costs, people will start planning for their future care needs in the way their do for their pensions in retirement.

There are a variety of ways in which the elderly with the means to do so can free up £75,000, but one hope is that the insurance industry will develop products that cover old-age care.

'Desperate struggle'

The government is also proposing increasing the means-tested threshold - there to ensure the less well-off get state help towards their care costs.

Currently anyone with assets of more than £23,250 has to pay for their care. Under the plans, the threshold will rise to £123,000, reflecting the fact that rising property prices over the years have effectively meant any home-owner falls outside the state system.

Start Quote

The vulnerable will still face rising care costs - homes will still be sold”

End Quote Andy Burnham Shadow health secretary

Mr Hunt also confirmed that the plans, expected to cost about £1bn a year, will be part-funded by freezing the inheritance tax threshold - at £325,000 for individuals and £650,000 for couples - for three years from 2015.

That is despite Chancellor George Osborne's Autumn Statement pledge, in December, to raise the threshold by 1% - to £329,000 for individuals and £658,000 for couples - in 2015/2016. Other funding will come from previously-announced changes to National Insurance and pensions.

Former Lib Dem care services minister Paul Burstow said existing means-testing arrangements were unduly "harsh" and the changes would provide greater "fairness and predictability".

Labour said it welcomed elements of the plan as a "modest step forward" but said progress was "faltering".

"The vulnerable will still face rising care costs - homes will still be sold," said shadow health secretary Andy Burnham.

And Labour backbencher Fiona MacTaggart warned that two million people would die before the changes came into force.

'Catastrophic risk'

Economist Andrew Dilnot, whose review into the future of social care recommended a basic care cap of between £25,000 and £50,000, said the proposals were "not perfect" but he hoped the new framework would "radically reduce" people's anxieties about how they would cope in their old age.

"It (the cap) is higher than I would have wanted," he told BBC Radio 4's Today programme. "I regret that. But I recognise that the public finances are in a particularly tricky state."

It was simply not "plausible" for social care to be funded out of general taxation, he added, and the proposed mixed system would ensure the state picked up the "catastrophic risk" and made sure "nobody is uninsured if they turn out to be very unfortunate".

The National Pensioners Convention said the proposals "simply tinker at the edges" and that a cap "will help just 10% of those needing care, whilst the majority will be left to struggle on with a third-rate service".

"The current system is dogged by means-testing, a postcode lottery of charges, a rationing of services and poor standards and nothing in the plan looks like it will address any of these concerns," its general secretary Dot Gibson said.

Ian Owen, chairman of social care needs specialist Partnership Insurance, welcomed the plan but warned of "an absolutely chronic lack of awareness" of how much people have to pay for care, how long they are going to need it for and what their options are.

Proposed changes to elderly care in England: What you could pay

People affected Care costs

*Assets not taking into account an estate that is growing. Note: Accommodation, if required, would be paid for separately - either by a person's pension, family or by means-tested state help. Source: Dept of Health

Initial assets* up to £123,000

Means tested - proportion covered by state

eg. Property/assets worth £17,500 or less

Pay £0 towards care (0% of assets)

eg. Property/assets worth £50,000

Pay £16,577 towards care (33% of assets)

eg. Property assets worth £100,000

Pay £44,611 towards care (45% of assets)

Initial assets above £123,000

To pay - up to max £75,000

eg. Property/assets worth £150,000

Pay £67,399 towards care (45% of assets)

eg. Property/assets worth £200,000

Pay £75,000 towards care (38% of assets)

eg. Property/assets worth £250,000

Pay £75,000 towards care (30% of assets)

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