Social care currently has a means and a needs test – in other words, you have to be both really poor, and really ill, to get funding support from your council.
The Conservative manifesto pledges to change the means testing element of this – shifting the benchmark upwards so that those with assets worth more than £100,000 have to pay for all of their care. This calculation includes the value of a person’s home, so the vast majority of home-owning older people will find they have to pay. This may seem unfair, but the current asset threshold is already very low (£23,250) – meaning not only all homeowners, but many social renters with modest retirement savings also have to pay for all of their residential care. The large jump in the threshold will means hundreds of thousands of the poorest older people will have access to partially or fully funded residential care for the first time.
However, the substantive difference in the manifesto is that the asset test will now also apply to care in one’s own home. This has been widely criticised, as it will expand the number of self-payers substantially in this market. It does, however, bring parity between residential and home care, and improving the clarity of the assessment system. It may also make it easier to move between care in one’s own home and in residential care (and back again). Up until now, this was never seen as viable, as people often had to sell their home to pay for residential care. The value of one’s home was excluded from home care, because it could lead to ridiculous situations where people had to sell their home in order to pay for care (in that home). And once one sold up in order to pay for residential care, a move “back home” would never be a prospect.
But this is where the manifesto is a game changer – it pledges that people will not have to sell their home in order to pay for their care while they or their partner are alive. This makes the inclusion of housing assets in the assessment for *both* residential and home care possible, as well as the ability to keep one’s home while you’re in residential care – making a move back home (and back into care again) possible, a flexibility that has never been possible before. The answer lies is equity release – financial products which essentially allow you to mortgage a portion of your home in return for cash to pay for care, which is then paid back with interest when you sell up – or, in many cases, when you die, and your beneficiaries will have to pay up.
All in all, it’s basically a rerun of the Andy Burnham policy the Conservatives branded “the death tax” – an idea that remains a reasonable policy solution to this most pressing of issues.
What is concerning from a social perspective is that the ‘care cap model’, which has been a Conservative policy commitment since 2011, has been dropped – clearly deemed too expensive. This would have seen the asset threshold raised to £100,000, but would also have limited the amount people would have paid for their care to an upper threshold, beyond which the state would pay. The model was certainly flawed in various ways, as I’ve recently outlined in The Telegraph, but it represented an important “safety net” idea that is now missing. More practically, it may well have helped stimulate the market for care insurance products by allowing some certainty over how much people were ever likely to pay for their care.
What we need in the long term is a fundamental reform of care delivery to promote preventative care, thereby reducing the overall costs of care to both citizens and government. This manifesto is silent on that front, so may fall down on May’s own assurance she is working on a “sustainable solution”. Deciding how care is paid for is one thing, ensuring that care costs do to not spiral out of control in the future is another. In the meantime, and while these proposals will no doubt prove controversial, the means testing changes announced in this manifesto will ensure the very poorest no longer pay for their residential care. While expanding the number of self payers overall – a conscious decision which would not have been made lightly – it will make it easier for people to pay for care in a way that doesn’t necessitate selling one home. That’s a fundamental change to the current system which creates greater certainty for older people.