Andrew Dilnot’s commission has used clever tactics in publishing a report on care for the elderly that even the deficit hawks will struggle to oppose
Today saw the long-awaited launch of the recommendations of the Commission on Funding Care and Support, under the tutelage of the economist Andrew Dilnot.
The Commission has taken a clever approach by building its recommendations around two observations that are impossible to dispute.
The first is a moral observation that we as a society do not spend enough on supporting the most vulnerable individuals experiencing care needs with no family or means to support themselves. The evidence of this is all around. Quality is often woeful. The Commission is putting an argument to politicians and all of us that the basic safety-net of the care and support system needs to be improved. No politician can stand up and dispute this.
The second observation is that the private sector insurance industry finds it impossible to provide protection to the population against the catastrophic costs of long-term care, because of unavoidable uncertainty around future patterns of need and life expectancy among the population of people needing care. This contributes to a ‘protection gap’ in coverage offered by the insurance industry, which the state must then step in and fill.
Importantly, the Commission has persuaded insurance industry bodies to publicly concede this. The long-term care funding debate has always been characterised by some voices who’ve argued for leaving it all to private insurance. One of the key achievements of the Commission is to silence those voices for good.
So, what next? The Commission has proposed how this framework can be realised as a new system of funding, built around a cap on personal care costs of £35,000-£50,000, and a new means-test threshold for residential care of £100,000. It is up to the rest of us to work out how it should be paid for and the precise design of this system. Here are some initial observations.
How to fund the £2bn cost of the new cap in care costs - that reportedly grows to £5bn per annum over 10 years – may lead to more political rows. The Department for Work and Pensions will block any attempts to begin means-testing older people’s universal benefits, as it prepares to start dismantling the infrastructure of Pension Credit and replace it with a new Universal Pension.
So, at some point the debate will almost inevitably have to come round again to the assets of the older generation. Nobody will want a replay of the ‘death-tax’ debacle, but everybody who has ever looked at this issue seriously has concluded that one way or the other, older people’s housing wealth has to be brought into play.
Second, cool heads will have to look at how the new system will work in practice. For all the talk of people buying insurance, initial estimates by the Strategic Society Centre suggest take-up would never exceed 6%, even on an optimistic scenario. The government may ultimately struggle to entice insurance providers, let alone the public, to bite.
And that is before policymakers have considered how people will buy private insurance against a total liability ultimately determined not by disability, by a local authority assessment of need.
These are big questions, but for the time being, they can wait. The care and support debate moved forward today, as an Oxford economist laid out an argument for spending more on care and support that even Conservative deficit hawks will find hard to dispute.
James Lloyd is director of the Strategic Society Centre
