Think-tank report calls for end to universal winter fuel payments in favour of care funding cap

Former Care Services Minister Paul Burstow has signalled his intention to remain an active political voice on older people’s issues, having contributed to a think-tank report published today that focuses on how the key proposals of the Dilnot Commission can be achieved.

Chaired by economist Andrew Dilnot, the Dilnot Commission was put together shortly after the Coalition Government came into power in 2010. Chief among the Commission’s reform proposals to fund care for an ageing population, and so avoid a demographic ‘timebomb’, was a call for a cap on individual care costs – a notable absence from the reforms announced by former health secretary Andrew Lansley in July 2012. The cap, proposed at anywhere between £35,000 and £100,000, will instead be looked for in Chancellor George Osborne’s 2013 Spending Review.

In today’s CentreForum report ‘Delivering Dilnot: paying for elderly care’, Burstow supports a series of key recommendations that include a cap on individual care costs of between £50,000 and £60,000, to be applied in 2015, while also raising the possibility of including an ‘upper capital limit’ of £100,000.

Former Care Services Minister Paul Burstow

Perhaps looking to offer the Treasury some manoeuvrability, the report also proposes that the cap be part-financed by ending the universal entitlement to winter fuel payments, claiming that £1.5bn a year can be saved by linking this benefit to pension credit instead. There is also support for the Insititute for Fiscal Studies’ call to end relief on capital gains tax, with the incentive of raising another £600m a year.

Putting fairness at the centre of this vision, Paul Burstow comments: “Social care isn’t free but it could be a lot fairer for those who have worked hard all their lives.

“Placing a cap on the amount people have to pay for care would protect people from the catastrophic costs they face now. But to make this vital and long overdue change, we have to find the money from somewhere. “By concentrating the winter fuel payment on those eligible for pension credit we can pay for a cap on care costs.”

Alzheimer’s Society chief executive Jeremy Hughes welcomes a focus on care funding at the start of 2013 and has called for a firmer political consensus within Parliament, commenting:

“We can’t ignore that millions of people, including many people with dementia, are being denied access to essential care because of the colossal hole in the adult social care funding pot. Discussing how we cut the cake in terms of where money is spent, including benefits for older people, is therefore vital.

Alzheimer's Society chief executive Jeremy Hughes

“However, these discussions should not be held in isolation. The only way to achieve a long term sustainable solution is for all the political parties to agree on a complete and achievable package of funding. People’s lives depend on it.”

However, Burstow has clashed with older people’s campaigners the National Pensioners Convention (NPC), whose general secretary Dot Gibson said:

“It’s a shame that someone didn’t buy Mr Burstow a calculator for Christmas – because if they had he would have realised that his plan just doesn’t add up.

“Introducing a means-tested system will create a costly and inefficient bureaucracy which evidence shows will result in those who need it most failing to come forward to make a claim. Our social care system doesn’t need this kind of tinkering at the edges – but a radical overhaul.

NPC general secretary Dot Gibson

“Taking money from pensioners who are trying to keep warm this winter on just over £10,500 a year will only create more fuel poverty and ultimately lead to more older people dying from the cold. Suggesting that these pensioners are well off and should pay for the care of other older people is simply ridiculous.

“The cost of our social care system should be shared across society as a whole – just like we do with education, the armed forces and the NHS. Why should the care of our most frail and vulnerable older people be treated any differently? If Mr Burstow’s party goes to the next election promising to take away the winter fuel allowance from 9m older voters they are likely to face oblivion at the ballot box.”

However, the former Care Services Minister’s proposals are supported by many leading care sector voices, with the report including contributions from the Association of British Insurers and the health insurer Partnership. Also involved is the leader of a past attempt to reform care funding, in Lord Stewart Sutherland, who chaired the Royal Commission on Long Term Care of Older People – a false dawn for care reform set up by Tony Blair’s Labour government.

Lord Sutherland accuses UK governments of acting like ‘ostriches, with their heads in the sands’ over care and accelerating demographic issues. He writes:

“Twice, in 1997 and 2010, new young prime ministers have entered office seized of the need for thought followed by action. In one case a Royal Commission on Funding Long Term Care of the Elderly was set up, in the other Andrew Dilnot and two colleagues were given the task of reporting on and recommending possible future options.

“The great worry now is that the Government is showing signs of missing the boat once again. The demographics are clear and, if anything, even more challenging. Yet the attention, policy, discussion, and financial response, falls far short of, for example, the response to climate change.

“The demographic changes are not contested by anyone, and the social consequences of ignoring them will be equally distressing. Yet in the Dilnot Report the Government has been given as clear a platform for policy formulation and action as we are likely to see for the next decade.”

Lord Sutherland goes on to criticise the Treasury’s ‘grip on budget restructuring’ which he sees as resulting in a programme for public expenditure that does not reflect reality, while also pointing the finger at health and social care services that remain stubborn to integration, who he sees as ‘wasting valuable resources’.

Chancellor George Osborne

Lord Sutherland continues: “Uncertainties in England’s care system are widespread, complex and stressful.

“They will not be resolved or even confronted until there is a clear will to turn the idealism of early days in office into firm sustainable policies.

“The Dilnot Report is the best offer of a starting point which we are likely to have for another ten years.”

Dr Yvonne Braun, assistant director and head of savings and retirement at the Association of British Insurers, calls for a keener focus on the lack of financial information and assistance available to families, who are too often left in the dark on how best to finance care:

Dr Braun writes: “Funding care needs can be an immensely far-reaching financial decision, where financial advice can make a very positive difference.

“There are less than 7,000 immediate needs annuities in force in England at the moment, compared to over 120,000 older people in residential care who pay the full costs of care themselves because they have eligible assets of over £23,350. The research suggests six or seven times more people could potentially afford immediate needs annuities, equivalent to 40 per cent of all self-funders. This would not only provide peace of mind for the individuals concerned and their families, it would also prevent people having to turn to state support because their care costs are greater than expected. Encouraging people to take financial advice is therefore critical.”

Managing director of care at the health insurer Partnership, Chris Horlick, echoes these sentiments, saying:

“Self-funders constitute 41 per cent of all elderly people in social care, yet they are among the most overlooked and poorly served in the social care system, which ironically they cross-subsidise.

“They suffer not only from a chronic lack of awareness of how to fund their long term care but also where to get appropriately qualified financial advice.

“We believe this report will provide a valuable contribution to the care funding debate and ensure this critical issue is not lost in the long grass.”

The pressure is now on the Treasury to find a way to support long-term care funding at last and upon a chancellor whose approval rate amongst business leaders has this week fallen to an all-time low of 11 per cent.