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Dilnot warns on LTC cap following new Government advice

Andrew Dilnot has warned that significant increases to the cap on an individual’s long term care costs could make any reforms ineffectual, following new advice to Government calling for a higher cap than he recommended.

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. The recommendation was intended to cap an individuals liabilities to enable financial services firms to develop insurance products which can cover them.

However, slides from a presentation in November by the working group set up by the Department of Health to look at the role financial services can play in funding long term care suggest a cap of between £50,000 and £60,000 might be “optimal”.

Speaking to Money Marketing, Andrew Dilnot (pictured) says he would be satisfied if the cap was set at that level but warned against it being set much higher.

He says: “The working group was talking about the level when the cap is finally implemented and it could easily be the case there is inflation between when we published our report and then. It does not seem to me that the financial services sector saying that level would be plausible is in any way inconsistent with what we were saying.”

“However, going significantly beyond £50,000 in 2011 prices would begin to make the cap significantly less effective and it would stop having the effects we saw as most important like risk pooling.”

The working group’s advice says: “Having a cap of around £50,000 to £60,000 might be the optimal point between making financial solutions more affordable and stimulating demand.” It adds that more analysis is needed on this point.

Care services minister Paul Burstow says it would be wrong to assume the advice will necessarily become Government policy and that final plans will be released in the white paper and progress report expected by April. He says: “It is wrong to say we plan to force elderly people to pay £60,000 for care. We are continuing to look at the whole system, which is outdated, unfair and in urgent need of reform.”

At the Conservative Party Conference in October, Dilnot warned he would not take a refusals to implement his proposals lying down, imploring ministers to meet their “moral duty” of implementing the reforms. This followed concern that the Government may look to kick the reforms into the long-grass due to the costs involved.

He says: “The thing that would make me cross is if we did nothing. The key point that is missing from the market at the moment is risk pooling and it is the cap which provides that. Once a cap is in place we will see lots of innovation in financial services firms and new products coming to market.”


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