It looks like the prime minister will support the Dilnot Commission’s call for a cap on an individual’s contribution to care costs. This is a positive move but any funding changes must be part of a broader process of welfare reform
Reports that David Cameron will make an announcement on the funding of long-term care in the autumn suggest the government could be about to embark on a crucial reform that has been a long time coming.
It is expected that the announcement will include the two main proposals put forward in 2011 by the Dilnot Commission on the Funding of Care and Support, and that these will be introduced into the Social Care Bill. The commission recommended there should be a cap of £35,000 on the lifetime contribution an individual must make to the cost of their care and an increase in the means-test threshold over which individuals are expected to pay for their care from £23,500 to £100,000.
Reform has been attracted to the idea of a cap for two reasons. Firstly it would give more clarity to families over what they are liable to pay and could help raise the very poor awareness of how social care is funded in the UK. Secondly, the certainty over maximum liability would support the development of a stronger market in financial products, such as insurance, annuities and equity release, encouraging people to play a greater role in providing for their care needs.
The key concern with the Dilnot Commission’s proposals has been the price tag. With a cap of £35,000 and a means test threshold of £100,000, the cost to the government could be more than £2bn a year. Given the current outlook for the public finances this creates obvious difficulties.
One option for managing this could be to delay real commitments. Indeed, it looks like the government will not take a spending decision until the next Spending Review and that the implementation of any plans will not take place until 2017. Another option to limit costs could be to raise the cap above £35,000 and lower the level of the means test below £100,000.
Either way the government will have to find some money at some point and in fact this could come from existing budgets. The problem is not that there is no money, but rather one of will. As the Dilnot Commission showed, the government already spends £140bn a year on older people.
But action to reduce spending on pensioner benefits, such as winter fuel allowance (with an annual cost of more than £2bn) or using the NHS budget is seen as politically impossible, due to previous promises and pledges. There is also the commitment the government made earlier this year to find a further £10bn of savings from the welfare budget while also ring-fencing pensioner benefits.
At the heart of delivering a funding model for care is honesty over the scale of the challenge and the tough decisions that will have to be made across all spending areas. The government is right to take on this challenge, but it must not shy away from real reform.
Changes to funding care must be part of a broader process of reforming the welfare state. The role of the state, and what the state spends money on, is not static. As needs change, so too should the welfare state.
Kimberley Trewhitt is a researcher at Reform
