The recent social care green paper failed to recognise the role the private sector can play in meeting an already high demand
The long-awaited green paper on reforming adult social care in England was finally published last week. Despite the massive challenges we face, the government’s proposals were lacklustre at best. The paper admitted ‘society is going to need to spend more on care and support’. But it then failed to provide a clear direction, failed to capture the real scale of the long-term care funding gap, and failed to impress the urgency with which change is needed.
Projections from the Office for National Statistics suggest that the number of people aged over 85 in the UK will double in the next 25 years and treble in the next 35 years. The Department of Health estimates that two in every three women and half of all men will need care at some point during their retirement.
The cost of long-term care is extremely high and is only likely to increase. Based on the figures in Derek Wanless’s 2006 social care review for the King’s Fund, it has been estimated that there will be a funding gap of £6bn in the next 20 years.
In addition to the demands on the public purse, long-term care puts a huge burden on individuals as well. Excluding nursing care, the average residential care place across the UK costs around £25,000 a year. A significant proportion of older people will need to fund their care by using their life savings or selling their home.
In recent years, several private sector innovations have come onto the market, notably immediate needs annuities. These pay an income that contributes to all or part of an individual’s care fees for the rest of their life. As well as providing reassurance for them and their families at a vulnerable time, local authorities are reassured that they will not have to pay for self-funders who run out of money. Yet despite this, the green paper has not fully recognised the role that the private sector could play in future provision.
The green paper sets out three possible options to meet the needs and expectations of people who will require care in the future: a ‘partnership’ model, a voluntary social insurance model and a comprehensive and compulsory social insurance model, all of which raise more questions than they answer.
With the UK’s ageing population, and gaping budget deficit, the public policy dilemma over funding long-term care must be addressed. It is right that the state provides a safety net for the poorest and most vulnerable older members of our society. But the reality is that it cannot afford to fund the increasing demand for long-term care. Individuals will have to make greater provision for themselves, a politically unpalatable message largely ignored by the current debate.
Indeed, buried in the green paper detail is the admission that the proposed funding options ‘do not include accommodation because we would expect people to pay for their own food and lodging, whether or not they were in a care home’. Yet this equates to tens of thousands of pounds per person that would not qualify for assistance.
We need a complete overhaul of the nation’s attitudes towards paying for long-term care. Attempting to persuade the public to pay into a pre-funded long-term care plan will be extremely difficult when a significant proportion of the population will not use it. It would be far more realistic to encourage people to make as much provision as they can for their ‘healthy’ retirement – and then purchase an immediate needs annuity when they require care.
More than 100 older people enter care every day. At the moment, most only receive financial advice when their savings are gone and they have to rely on the state. In the short term, immediate steps are necessary to tackle the maze of bureaucracy and confusion that confronts older people and their families when they need to consider long-term care issues.
