Care services minister Norman Lamb is on the cusp of passing the biggest reform of long-term care funding in a generation.
The Care Bill is making its final moves through Parliament. It aims to fulfil a Government promise to stop the scandal of pensioners selling their homes in distress to pay for care.
In 2010, economist Andrew Dilnot was commissioned to solve the problem. His final report proposed a lifetime cap on care costs with the expectation it would bring certainty to financial services firms and spark new products to help people pay for care.
As a result the Government accepted a £72,000 cap on care costs to come into force in April 2016 and has won cross-party support.
The Care Bill was introduced by Liberal Democrat Paul Burstow but he was replaced by Lamb in a September 2012 reshuffle.
In an interview with Money Marketing, Lamb says while becoming a minister was unexpected he now feels he is on a “mission”.
He says: “The current system is deeply unfair. People who have budgeted carefully through their working lives and then, in the lottery of life, end up suffering dementia face losing everything they have worked for.”
Reform of long-term care has long proven the Holy Grail of policymaking.
Labour came to office in 1997 and set up the Royal Commission on long-term care the following year, but reforms were later kicked into the long grass.
At the last election Labour wanted a so-called “death tax” to pay for a National Care Service whereas the Conservatives and Lib Dems favoured more private sector involvement.
Lamb says: “The Dilnot reforms would not have happened without a coalition. There have been care ministers before me who wanted to reform a broken system but have always come up against Treasury or other Government resistance.
“In the Coalition’s mid-term review the Lib Dems had a list of things to achieve and Dilnot was number one on that list.”
Labour estimates the true cost of the cap to be £150,000 when hotel and accommodation costs are included.
Meanwhile the Government expects financial services to rush into the sector with new products.
Lamb says: “The financial services industry has made it clear the cap provides a degree of certainty to feel more confident about potential success. When there is no limit to liability at all it is self-evident there would be little to no interest from financial services firms.”
Lamb says his discussions with providers such as Aviva and Legal & General give him confidence they will enter the market in a significant way. He says it will spark a “diversity of products” including annuities, pension uplift payments and equity release.
Under the Bill councils will need to refer those who pay for care to independent financial advice for the first time, which should help broaden access to available products.
The term ’independent’ in this case relates to charities, IFAs or other sources of financial information. Cross-party peers wanted the Bill to go further and refer all care funders to regulated advisers.
Former minister Burstow has warned there is the “spectre of a misspelling scandal” surrounding the Bill unless regulated advice is given a bigger role.
But Lamb rejects the need for a “one size fits all” approach and says some people are capable of making financial decisions without needing to speak to an IFA.
He says: “We have to be proportionate, we don’t want a one size fits all [situation] pushing everyone through a tick box exercise that shows you have obtained financial advice.
“We have amended the Care Bill to strengthen the steer to people to get financial advice – regulated or other. We have got the balance right.”