PLMR Briefing Note

The Dilnot Report Fairer Care Funding

The Dilnot Commission on Funding of Care and Support aims to establish a new settlement on funding of care and support in England to give older people and their families peace of mind in planning for future care needs. The Commission also seeks to bring to an end the practice of older people having to sell their homes to pay for residential and nursing home care. The Commission estimates that its proposals, outlined in the Fairer Care Funding report, published today, would cost Central Government around 1.7 billion. In the current climate of very tight control of public expenditure, funding additional investment in care and support will be very difficult to achieve and will require reductions in other areas of public expenditure or raising additional tax revenue. Andrew Dilnot said that the Government will need to re-profile existing expenditure or introduce a specific tax which would be levied on both the working and retired population. Andrew Dilnot has also said that he expects the Coalition Government to produce legislation by Easter 2012 at the latest so that the new system can be implemented in 2013. Why was the Commission on Funding of Care and Support established? Andrew Dilnot, an economist and former Director of the Institute for Fiscal Studies (IFS), was asked by Prime Minister David Cameron to produce proposals on how long term care could be funded in the future on a sustainable basis. The cost of care for older people became a major issue in the 2010 General Election following the breakdown of talks between then Health Secretary Andy Burnham, then Shadow Health Secretary Andrew Lansley and the then Liberal Democrat Health Spokesperson Norman Lamb in the last year of the Labour Government. The Commission was established to address the issue of funding long term care because the current system of means testing and local authority funding is considered to be unsustainable and unfair, as the number of older people is set to increase significantly over the next twenty years, the number of people aged 85 and over in England is projected to double to 2.4 million. A quarter of 65 year olds today can expect to face care costs of over 50,000 and for one in ten older people the costs will be more than 100,000. The current system of means testing and local eligibility criteria is both confusing and complex to run. All stakeholders, from local councils, older peoples organisations, care home providers and carers groups agree that the system is no longer fit for purpose and needs reform.

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What does the Commission on Funding of Care and Support recommend? The main recommendations of the report are as follows: Each individuals lifetime contributions towards their social care costs - which are currently unlimited - will be capped. The cap should be between 25,000 and 50,000, with 35,000 being the recommended limit. The means tested threshold, above which people are liable for their full care costs, should be increased from 23,250 to 100,000. National eligibility criteria and portable assessments should be introduced to make the care system easier for older people and their families to understand, particularly when older people may choose to move to another part of the country to be nearer family members. People who enter adulthood with care and support need should be eligible for free state support immediately, rather than being subjected to a means test. The report recommends a major campaign and new national information and advice strategy providing comprehensive information on how the new system will work. People in residential care would need to make a contribution towards their general living costs and that contribution should be fixed, recommended at between 7,000 and 10,000. Support for carers needs to be improved with better carers assessments and better information and advice for carers. Universal disability benefits should continue, but Attendance Allowance should be rebranded so people understand its purpose. of the implementation of the Dilnot reports

What are the implications recommendations?

Older people and their families will be better able to plan for their future care needs and will no longer run the risk of losing all their assets. Those with assets valued more than 100,000 will know that they will need to plan for potential care costs up to a value of 35,000-50,000. Only one in two people in their fifties save for a pension and only one in five are saving for their care costs according to a YouGov poll for Saga, so in future a greater proportion of older people will need to plan how to meet potential care costs.

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The Commission believes that this combination of a cap and the higher means tested threshold would ensure that no-one going into residential care would have to spend more than 30 per cent of their assets on their care costs. The Commission estimates that the recommended changes to the funding system would cost from around 1.3 billion for a cap of 50,000 to 2.2 billion for a cap of 25,000. The financial services sector is likely to respond to these changes by developing savings and insurance products. A higher proportion of older people will be eligible for Central Government funding for their care needs. There will be a move towards a more uniform system of care and support for older people with national eligibility criteria and funding thresholds, moving away from local authority commissioning. Local councils role will focus on information, advice and support, and potentially financial services related to funding for residential care, rather than assessing older people and brokering residential home placements. The transition for young people with physical disabilities, learning difficulties and mental health problems will be easier, but the cost of lifetime support will be very significant for local authorities. Greater dependence on Central Government for funding residential care costs, particularly in areas of the country where older peoples assets are likely to be below the threshold of 100,000. Local authorities could have a new role in providing loans to residents with assets above the value of 100,000, secured against the value of their property. The report is supportive of integration between health and social care and wants to see better alignment of assessment processes between social care disability benefits and health.

What are the political implications of the reports recommendations? It is by no means clear that the Government will accept the reports recommendations as there are significant financial implications for increased Central Government funding of residential care for older people.

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If the Government accepts the reports recommendations, the Treasury will want to contain further increases in public expenditure on residential care to a minimum, so the level of additional investment is likely to be constrained at a time when care homes are under significant financial pressure. Pressure to contain costs is likely to intensify particularly for providers offering residential care at the higher end of the care homes market, where clients will in future have their care paid for by Central Government rather than from their own funds. Older people with substantial assets will be the major beneficiaries of the proposed changes, as they will no longer have to sell their homes to fund their care. The role of local authorities will change significantly with a greater focus on information and advice on care and support for individuals and their carers, and a move away from commissioning services. The report recommends the establishment of national eligibility criteria.

Timescale for implementation Andrew Dilnot said that he wants to see legislation by 2013 and a white paper published no later than Easter 2012, with a view to the new system being fully operational by 2014-15. Shadow Health Secretary John Healey has called for all-party talks to start in the next couple of weeks. Labour Party Leader Ed Miliband has welcomed the decision to cap contributions at 35,000 and said that the regulation of care also needs to be looked at. The Commissions report sets out the following timetable: 2011 Recommends that the Government publishes a White Paper by December 2011 and the establishment of three Government working groups to take forward the following elements of the new system: To develop more objective, portable and national eligibility and assessment framework and how the new system might align with disability benefits To support the development of new financial products to fund long term care To design a new national and local framework for information and advice for those who need care and for carers.

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2012 The Government publishes the Social Care Bill. The Government should: Set out a firm timetable for implementation of the reforms including the capped cost element and changes to the means tested system and Runs an awareness campaign and starts to implement an improved information and advice service with stakeholders.

2013 onward Implementation of changes to the funding of the cost of adult social care and support. Sector reaction to the Commissions proposals Martin Green, Chief Executive of ECCA: Andrew Dilnot and his Commission have done a great job in identifying that the current system is broken, and putting in place a clear and accountable process for the future funding of care. This report can redefine how we fund care for the next 50 years and it is incumbent on us all, whether in Government or in other stakeholder communities, to do all we can to ensure that its recommendations are implemented. Michelle Mitchell, Charity Director at Age UK: 'Age UK believes everyone will benefit if the anticipated Dilnot recommendations are adopted. People on low incomes will, as now, have their care provided free, but in a better funded and improving system. Others, who genuinely fear the prospect of older age and the potential cost of care, will have their individual care costs capped and have peace of mind that they will not have to face catastrophic bills for their care in old age. Peter Hay, President of ADASS: The report signals what will become the moment when adult social care was put on a footing to become fit for purpose in the twenty first century. Jeremy Hughes, Chief Executive of the Alzheimers Society: Today's welcome report could bring to an end the scandal of the colossal Dementia Tax where every year tens of thousands of families are left to pay all their care costs whilst other diseases are paid for by the NHS. The government mustn't miss this opportunity to right a wrong that is destroying lives. In a new system we must end the postcode lottery that gives different support depending on local authority. The Dilnot Commission has given the coalition government the opportunity to show that it is a caring government. Pending implementation they must also show they care, protecting social care spending in the way they are doing for health. ENDS
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