If not Dilnot, What?

On 29 May, Lord Lipsey hosted an event in the House of Lords, exploring the potentially contentious issue of “If not Dilnot, what?”. Whilst most speakers accepted that at this stage, Dilnot is probably “the only show in town”, the event considered how the Dilnot recommendations may need to be adapted to meet a changing political reality.
There was a recognition that Dilnot’s proposals were fairer than the current system in that for example, prudence is penalised less than under the current system. But also acceptance that the recommendations add layers of complexity to an already complex system. And the solutions are ‘expensive’.

Speaking at the seminar, Professor Julian Forder of PSSRU highlighted the current unmet need which will need to be funded on top of the cost of the Dilnot recommendations. He argued that the funding gap going forward under the current system would be £3.8bn. Under Dilnot the gap would be £7.3 bn (2025 costs). Even with assumptions of compression of morbidity, the costs are very high.

Most speakers, at the event, supported by Partnership, felt that taxpayer funded care was not going to happen. They felt that there isn’t the money or appetite for free care for all. And the public seems unwilling to pay higher taxes.

The event explored a number of potential adaptations to the Dilnot recommendations:
1: Whether there are adjustments that could reduce the cost e.g. changing the level of the cap
2: Whether there are clever ways financing that wouldn’t involve extra tax e.g. an inheritance based tax or redistributing funds from Attendance Allowance.
3: Whether there are things that can be done to mitigate some of the distributional challenges, e.g. Cap a low percentage of the wealth of very rich people.
4: Whether there was potential to review possible supplements e.g. the potential of Equity release/pensions to fund some care.

Les Mayhew explored the role (and potential) of pensions and other financial products in paying for long term care. His analysis included immediate needs annuities; top up insurance; disability linked annuities (like a pension annuity but higher rates if become disabled/need care); and long term care bonds.

But there was an acceptance by many speakers that the insurance market had failed so far. Steve Groves CEO of Partnership highlighted that there were only two providers of immediate needs annuity. 40% of care recipients are self funders yet only 4% take some form of insurance (costing the state £4bn). He argued, however, that there was no alternative to the state picking up the so called ‘catastrophic’ care costs.

During the discussion, a huge number of additional options (“Dilnot on a diet”) were explored including
* Raising the upper capital limit
* Setting a higher cap
* Changing the capital rules
* Restricting access to the very frail and those most at need
* Making integrated care work
* Clarifying the boundary between health and care
* Investing in prevention

Introducing the event Lord Lipsey noted that the Government had “gone relatively quiet” on the issue of care funding, although pointed out that this may not necessarily be a bad sign. “We can’t even find out from the press what is going on”, he said.
We can expect a draft Care and Support Bill, based on the Law Commission report, alongside a progress report on funding. The All Party talks continue. The issue of long term care funding has probably gone up to the quad of Cameron, Alexander, Clegg and Osborne, but their focus has probably been elsewhere over recent months. Lord Lipsey argued that either nothing is happening and the issue is being kicked into the long grass, or the decision has been made to incorporate this issue into the spending review.

Sadly, as one speaker commented at the end of the event, care funding still not an issue hitting MPs post bags. Whilst the event highlighted some very interesting options, what is clear is that for the Government to be motivated to act on funding, there is a need for further political pressure from older people and their carers. The “granny tax” debate has highlighted the power of this group. We need to find a way of focussing their energies on the need for a sustainable funding solution to the care crisis.

David Sinclair

NB. Counsel and Care are currently running a sweepstake on when the Government will launch its Care White Paper. http://www.independentage.org/social-care-white-paper-sweepstake.aspx What do you think?