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Government proposes long-term care council loans

Andrew Lansley Conservative health MP

People who need to fund long-term care will be able to borrow the money from their local council with the money being recouped when their home is sold off or remortgaged after they die, under proposals put forward by the Government.

The Government has unveiled its social care white paper today and though it supports the Dilnot Commission’s proposals for cap on the cost of care of £35,000 and an increased means-tested threshold of £100,000 “in principle”, they are not included in the accompanying bill. There is currently no cap on the costs of care and the means-tested threshold is £23,250.

Agreement has yet to be reached on how the Dilnot proposals will be funded and the final decision is likely to be until delayed until the next spending review, which the Treasury says is expected in 2015/16.

From April 2015, local authorities will pay for care up front if individuals cannot afford to do so without selling their home. Councils then reclaim the money after death when the house is sold.

Announcing the plans in Parliament this afternoon, Lansley said: “I can confirm today the government support for the principles of the Dilnot commission’s report as the right basis for the any new funding model. That is financial protection through capped costs and an extended means test.

“We will introduce a universal deferred payment scheme this will mean noone will be forced to sell their home in their lifetime to pay for care.”

“Our talks with the Labour party were constructive but no plan for funding Dilnot was agreed or indeed proposed by either side. A decision at the next spending review will allow time for further discussions… that will include the level of the cap and whether a voluntary or an opt-in approach is a viable option in addition to the universal options.”

Association of British Insurers director of life, savings and protection says all three parties should commit to tackling the future funding of long-term care.

He says: “These frustrating delays have left people in constant limbo, unable to plan ahead and facing up to funding their care when it is too late, with this burden inevitably falling on the NHS and local communities crippled under stretched budgets. Action is now long overdue and we call on all three political parties to make a firm manifesto commitment at the next election to resolve this issue and tackle funding social care to avoid the buck being passed on to yet another generation.”

This morning, it was reported Newcastle City Council has set up its own commission to look at adult social care out of frustration with the lack of a decision over funding long-term care. PricewaterhouseCoopers government and public sector partner Michael Kitts says: “Local authorities cannot wait until all of this becomes clear to take action. The  demographic shift and demand for care services is not going away. By 2033, a tenth of the population will be over 75.”  

Writing in the Daily Telegraph, Health Secretary Andrew Lansley (pictured) says: “Our plans will end the scandal of people being forced to sell their home to pay for care. From 2015, everyone will be able to get a loan instead of having to sell their home while they are alive, implementing a key recommendation of Andrew Dilnot’s report.

“But I agree we can go further. We can enable people not to lose everything they have worked and saved for if they need care for several years. That is why we agree in principle that a limit on the amount people pay themselves would be the right way forward, and we need now to seek agreement for how this cane be funded.”

The Institute for Fiscal Studies and Conservative MP Nick Boles have both suggested that means-testing pensioner benefits could raise the money to pay for the cap. However, at Prime Minister questions this afternoon, David Cameron said he would stand by his promise to protect universal pensioner benefits.

Some Conservative MPs, and organisations like the Nuffield Trust, are suggesting the cost should be transferred to the NHS budget though this could prove difficult for the Government which has ringfenced NHS spending.

Prior to the 2010 election, Lansley, then Shadow Health Secretary, branded Labour plans for levy to be paid after death to fund a National Care Service as a “death tax”.


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There are 4 comments at the moment, we would love to hear your opinion too.

  1. Nimbyism, local government does not have the finance to cover such enormous potential expenditure, this is seriously flawed thinking, and vote posturing, local government has to cover policing, street cleaning and social care and are cutting back, if there will be a limit of £35k maximum liability, it does not take a lot of imagination to see this running out in a matter of months, and people can live into their late 90’s or more. Lets have some honesty, the over 65’s already outnunber the under 16’s.

  2. I thought this was already in place anyway?

    The government is thinking about linking benefits to the cost of living in the area you live.

    So why an arbitary ceiling for carehome fees that will only benefit the rich?

  3. The deferred payment scheme is already offered by most councils, although it is discretionary. Currently, however, it is interest free for the life of the patient. The draft bill introduces interest on the loan for it’s full term. So, it will be more expensive….

    Otherwise, the draft bill is pretty sensible, although avoids the main issues of how much people might have to pay.

  4. After a lifetime of working and paying taxes, long term care of a certain standard should be available to all. Those who want more than the basic standard can pay the extra.

    If we can afford to pay benefits to EU citizens from the former Soviet bloc (which they wouldn’t receive in their own countries), we can afford to look after our own!

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