Social care reform: elderly people to borrow cash for care

Andrew Lansley will announce scheme to let councils pay for residential care, to be repaid when elderly people die

• Hélène Mulholland and Randeep Ramesh
• guardian.co.uk, Wednesday 11 July 2012 

The health secretary, Andrew Lansley, will announce plans to "end the scandal of older people being forced to sell their homes" by allowing the elderly and vulnerable to borrow the cash to pay for residential care from councils – to be repaid when they die.

The government will introduce a deferred payment scheme from 2015 as part of a package of measures proposed by the Dilnot commission a year ago. This will allow local authorities to agree to pay in advance for care if individuals cannot afford to do so without selling their home. Councils then recoup the cash when the house is sold.

Lansley denied the scheme would encourage people not to save for their retirement over fears the money would go to the state.

He told Sky News: "If we are able to fund a system of capping the care costs that people have to pay, it will mean exactly that problem is substantially solved, that people will know that they can protect what they've worked and saved for through their lives even if they were to have the consequences for example of having dementia over several years later in life."

The deferred payment scheme is self-financing as people pay interest on the loan. Instead the vexed issue of social care funding will be considered at the next spending review – and new measures only undertaken after the next election.

At present 40,000 people sell their homes to pay for care each year.

Sources in the Department of Health denied the scheme was a "death tax", a reference to a Labour plan for a £20,000 levy deducted from the estates of older people when they die to pay for care. "It's not a tax because it's not mandatory. This is a voluntary scheme," said a source.

A limited version of the scheme runs in England at present and about 8,500 people have borrowed about £200m.

Lansley, who will launch the government's white paper on social care, a draft care and support bill and a progress report on social care funding reform on Wednesday, told Sky News: "I think we all recognise that for older people in particular, when they become very frail, at the moment it's a very complex and confusing system; often unfair in different places across the country because of different eligibility criteria to care locally, and often they're exposed to catastrophic care costs that can wipe out everything that they worked and saved for. So this particular proposal, that allows people that are going into care homes to defer that payment – in effect to have a loan from a local authority that means they don't have to pay that until out of their estate – that means that people don't have to sell their home immediately to pay for care."

The measure is the only part of the Dilnot commission's report which will be enacted. The two key proposals – capping the total cost of care to £35,000 and extending support to the elderly with assets of £100,000, up from the current limit of £23,250 – will only be supported "in principle".

The Treasury blocked the proposals on the grounds of cost: the two would cost nearly £1.7bn.

Although a quarter of people can expect to pay nothing for social care, half can expect care costs of up to £20,000 and one in 10 can expect costs topping £100,000.

Lansley said there needed to be "consensus" on the best way of paying for this.

He said there was still "a great deal" to do to improve social care.

"Firstly, we need to make sure that there is better quality care. That's why we are training more care workers, why we're putting a set on new training standards in place and a code of conduct on dignity and respect. From today, you will be able to look at quality ratings for the care providers that are providing you care.

"We know there's a lot that's wrong. There's people the length and breadth of this country who don't know, if they were to need care, who they get it from, what their eligibility might be, what the standards are of the providers of that care. We need to tackle, and we will, in the white paper we publish today, we'll tackle all of those issues, including eligibility, nationally, so people can be clear that across the country there isn't a postcode lottery in terms of access to care."

The shadow health secretary, Andy Burnham, said the proposals being unveiled were meaningless without the money to make them a reality.

"George Osborne should get his act together and hand back half the money he has taken from the health budget," said Burnham. "The government is failing to face up to England's care crisis. Older and vulnerable people are seeing support withdrawn and increased charges for care. Councils are in danger of being overwhelmed and the NHS simply won't be able to function if things are left as they are."

The government will announce that the NHS will transfer an extra £300m to local councils to help "integrate" social care and health services. There is another £200m for housing projects to adapt houses for the elderly.

This article is excerpted from The Guardian and appears courtesy of them.