Monday, 16 July 2012

PAYING FOR CARE – DEJA VU VU VU

UPDATE - the exact figures proposed for when the policy begins in April 2017 were set out on 11 February 2013 here 

Budget 2013 confirmed that the cost would partly be met by extending the freeze on the Inheritance Tax threshold for three more years 2015/16 to 2017/18 - see para 1.196.

FEBRUARY 2013 - SEE UPDATE BELOW.

A Government comes to power. It commissions a report into how we pay for the growing cost of care for an ageing population. In July, just before Parliament disappears for the summer and more than a year after the report was published, the Government responds. It says it will improve the means-test which assesses what help people get with the cost – including raising the upper capital limit above which no help is given. And it promises a loan scheme to ensure that no-one would be forced to sell their home to pay for care.

Yes, it is 27 July 2000 and the last Labour Government publishes its response to the Royal Commission on Long Term Care which it commissioned in 1998.

The more I read that twelve year old document the more astonished I am at how similar it is to the recent Coalition Government response to the Dilnot report on long term care which it commissioned shortly after coming to power in 2010. In 2000 there are plans to improve the lot of carers, set common principles for assessments for care needs in different parts of the country, and provide for individually tailored care packages. And of course the announcement of a national scheme to let people pay the cost of their care after death from the proceeds of their home. It began in 2001. 

2012
Roll forward a dozen years and the same plans are rediscovered. Not least the ‘announcement’ on 11 July 2012 of, ahem, a national scheme to let people pay the cost of their care after death from the proceeds of their home. It was an astonishing triumph of PR over substance. And the bait was duly taken up by all media outlets – from the Daily Express to Radio 4’s Today programme – repeating as if it was a fact that 40,000 people a year would no longer be forced to sell their home to pay for their care.

In fact no-one – I repeat NO-ONE, again NO-ONE – can be forced to sell their home to pay for their care. The figure of 40,000 is more than double the actual number who do sell their homes to pay care home fees. Some of the 19,000 who do are deceived into it by cash-strapped local councils who wrongly tell them they must, aided and abetted by false headlines in the press. But some choose to use the value of their home to pay for better care than the local council will give them. And why not?

The scheme introduced by the last Government in October 2001 was “to ensure that people… are not forced to sell their homes as soon as they enter residential care.” It would “help…people who do not want to have to sell their homes in their lifetimes to pay for their care by making loans more widely available”.

Over the years the scheme became compulsory. In 2009 the Department of Health issued a circular LAC (DH)(2009)3 which said Ministers expected councils to offer deferred payment schemes and “it is the Department’s view that if a local authority were to have a policy of never exercising its discretionary powers to make deferrals, it is likely the courts would find this to be unlawful.”

We know that 8,500 people are currently in such schemes with a total debt of £197 million – an average of £23,000 each. Lawyer Lisa Martin of Hugh James confirms that in her long experience anyone who asks for a deferred payments scheme – and insists they have a right to it – will get one. But even if they don’t all they have to do is refuse to pay. The local council still has to provide care and can let the bill clock up and take a charge against an empty home so it is paid after death. That power was given nearly thirty years ago in s.22 of the Health and Social Services and Social Security Adjudications Act 1983 (HASSASSA).

In either case no interest is charged on the debt while the resident is in care and that concession lasts for an extra 56 days with a formal deferred payment scheme.

So the Universal Deferred Payment Scheme – carefully pre-announced on 11 July before the detailed documents were published – was not new at all. Even the wording was familiar

2000: “to ensure that people… are not forced to sell their homes...in their lifetimes.”
2012 “so that no-one is forced to sell their home in their lifetime to pay for care”

The only new thing – kept carefully under wraps in those morning tours of the broadcasting studios – is that it will actually cost the heirs more than the present scheme because interest is charged on the debt from the start. That could add a few thousand pounds to the amount taken from the estate when the scheme starts in April 2015. And buried in the 150 page draft Care and Support Bill is the planned repeal of s.22 of HASSASSA to make sure there is no way out.

CAP ON IT
The other key change announced in principle in July 2012 was the cap on the cost of care. But that was a deception too. The Dilnot Commission on Funding of Care and Support proposed that the cost of care be capped. He suggested that a lifetime cap of around £35,000 would be ‘fair’. But that cap was only on the care element of the costs – the residential board and lodging charges of up to £10,000 a year would still have to be paid. And the cap is not an amount of money – it is the amount of care that £35,000 would buy at local council rates. The Government revealed in its Progress Report on Funding Reform (Figure 6) that it reckons £35,000 would buy 100 weeks of care. Someone paying £500 a week for that care would still have to buy 100 weeks-worth and spend £50,000 before the cap applied.

Figure 12 indicates that the Government has done costings right up to a cap of £100,000 which would mean paying for more than five year’s care before the cap kicked in. That would achieve its stated objective to “look at how reform consistent with the principles of the Commission’s model can be implemented, but at a lower cost to the public purse” (p23). In other words cheaper. But every penny that is spent will go mainly to wealthier groups as those with no resources get all their care paid for already. Even with a cap at £100,000 about half a billion pounds more a year would go to the richest fifth of the population (Figure 13). No wonder the Government gave no commitment about what the cap would be or when it might be introduced.

UPDATE: If the cap is set at £75,000 as widely leaked on 9 February then it would not in fact kick in until 75000/350=214 weeks of care had been paid for. If a real person - as opposed to a local council - paid £500 a week for that care they would have spent £107,000 before the cap kicked in. And they would have been paying hotel costs of £10,000 a year for more than four years, so close on £150,000 gone before the cap fitted. By then most residents would have died or used up all their funds.

NOTES
You can marvel at the July 2000 The NHS Plan: the Government’s response to the Royal Commission on Long Term Care.

The recycled plans are in the 2012 White Paper Caring for our future:
reforming care and support www.dh.gov.uk/health/files/2012/07/White-Paper-Caring-for-our-future-reforming-care-and-support-PDF-1580K.pdf  and the finance details are in Caring for our future: progress report on funding reform


You can read how to get the NHS to pay for your care www.paullewis.co.uk/archive/saga/2012/20120601Works.htm

If the NHS won’t pay here is why you still do not have to sell your home to pay for care written by me in each of the last three decades
2010 www.paullewis.co.uk/archive/saga/2010/201005Works__Care_Home_Costs.htm includes my fact check on the false 40,000 figure

5 comments:

  1. Fascinating, many thanks for posting. I'll make sure to share this as it's relevance spreads far and wide

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  2. Typical politicians - local and national. Failing to publicise this allows them to mislead and take advantage of elderly people when they are at their weakest and least able to stand up for themselves.

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  3. At last - some clarity, after 24 hours of complete confusion and obfuscation by Government and BBC Well done, Paul!

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  4. Just wanted to say I appreciate the post.  You have really put a lot of time into your posts and it is just great!
    care in the home

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  5. It is really interesting to read what you write, thank you. This topic is very important and social problems should not be neglected. Do you write practical financial articles, for example how to choose cash loans on-line?

    ReplyDelete