Perspective News

Already struggling under the weight of rising costs and budget cuts, the UK faces a crisis in the funding of social care for the elderly. Since 2004, the number of Britons aged over 85 has risen by two-thirds, and demand for care has outstripped supply. Looking ahead, the UK’s elderly population will continue to expand. In response, the coalition government set up the Commission on Funding of Care & Support – headed by economist Andrew Dilnot – to undertake an independent review of the cost and funding of social care in England.

The Dilnot Report found that the current system is “unfair and unsustainable”, and called instead for a form of collaboration between the state and the individual. It recommended that the means-tested threshold – above which individuals are liable for the cost of residential care – should be increased from £23,250 to £100,000, and that individuals’ lifetime contributions towards the cost of their social care – which is currently unlimited – should be capped at a recommended £35,000. Those living in a care home will have their food and accommodation costs capped at between £7,000 and £10,000 each year. The system should be national and portable, in order to ensure that those who move house are not disadvantaged.

The proposals have raised questions about cost – if implemented, the recommendations would increase the annual charge to the taxpayer by £1.7bn. Controversial current rules mean the elderly often have to sell their homes in order to finance their care, but the Dilnot Report proposes that the value of the person’s home should only become a factor if they move into a residential care home.

Andrew Dilnot commented: “Putting a limit on the maximum lifetime costs people may face will allow them to plan ahead for how they wish to meet these costs.” At present, according to the Dilnot Commission, one in four people will spend little or nothing on social care. Half will spend more than £20,000, and one-quarter will spend more than £50,000. One in 10 will spend more than £100,000. Looking ahead, insurance companies are expected to step into the breach and offer solutions to help individuals and advisers to plan ahead. It is difficult for individuals to forecast the cost of their future needs, but it is important to consider how you are going to fund the cost of any care that falls below the recommended cap.

The contents of this article should not be construed as advice and do not necessarily reflect our views. Independent Financial Advice should always be attained in order to assess your own individual circumstances.