People should be automatically sent information or signposted to advice about long-term care funding at certain trigger points in their life, according to Commission of Funding of Care and Support chairman Andrew Dilnot.
Giving evidence to the health select committee this morning, Dilnot said too many people do not think about long-term care until they reach a crisis point and prompting them, for example at retirement, could be a helpful reminder.
He said he is confident his reforms, which propose capping the amount any individual will pay towards care at between £25,000 and £50,000, will lead the financial services industry to come forward with products which contribute to that cost.
He said: “One of the interesting things would be thinking about whether the point of retirement is a point at which it is possible to trigger information and advice. It is a time when people start thinking about care but are not yet in a crisis, the worse possible time to be thinking about financial products.”
He told MPs the industry would have to “work very hard” to overcome people’s reluctance to buy products after recent misselling scandals, including this week’s £10.5m fine for HSBC for misselling to elderly clients. But, he added that his reforms would lead to a “slow and steady” emergence of a new market for financial services firms.
He said: “There will be a variety of new products with most of them based around homes or pensions because the tax system means that those two assets are so tax privileged it is very difficult to save anywhere else.”
Dilnot expects to see better equity release schemes because the contribution cap means people will know how much they will need rather than having a potentially open ended liability.
The Dilnot commission’s report, published in July, calls for a cap on individuals’ lifetime contributions to social care costs of between £25,000 and £50,000, with £35,000 the recommended figure. When that cap is reached, people would be eligible for full state support. Currently the means-tested threshold where people are required to fund the full costs of their care is £23,250. The commission recommends increasing this to £100,000.
Speaking to Money Marketing at the Conservative Party conference in October, Health Secretary Andrew Lansley said a white paper would be produced alongside a progress report on Dilnot’s funding recommendations. But he refused to quash rumours the Government could sideline the social care funding reforms proposed by the Dilnot commission. In today’s evidence session, Dilnot said it was perfectly reasonable that the Government was talking until April to respond and he is committed to this project until then, promising to keep up the pressure to implement his proposals.
Lord Warner, who also sat on the commission, told MPs he has put down an amendment to the health and social care bill which would enable the Government, if it wants to and it can get cross-party support, to create regulations and include the proposals in April’s white paper.
Dilnot says his reforms were necessary because the current funding system is “nuts” with a squeeze on state funding for long term care meaning self-funders end up cross-subsidising those funded by local authorities.
He said: “The current system is unsustainable in almost every way. It should be the system which looks after us when we are at our most vulnerable. But, despite some very good care being provided the system does not work. There is not enough funding going into it, the market is not functioning properly and we are not getting the diversity and choice we would like. It is bust in every dimension.”