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Govt to set long-term care cap at £75,000

George Osborne 480

The Government is expected to set the cap on long-term care costs at £75,000, more than double the £35,000 cap recommended by a commission led by economist Andrew Dilnot.

The Sunday Times reports chancellor George Osborne has agreed to stump up £700m for a £75,000 cap in a deal between the Department of Health and the Treaury.

The Government’s approach to long-term care reform will be set out as part of the coalition’s mid-term review, which will be published later today.

The Dilnot Commission, which published its report into the future of long-term care in July 2011, called called for a cap on individuals’ lifetime contributions to social care costs of between £25,000 and £50,000, with £35,000 the recommended figure. Under Dilnot’s proposals, 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 Dilnot commission recommends increasing this to £100,000.

Osborne is thought to have dismissed the introduction of a lower cap on care costs as that would push the cost to the Government up to £1.7bn.

As with the Dilnot proposals, the £75,000 cap would not cover so-called “hotel costs” of accommodation or food, and is expected to be introduced in 2015/16, according to the report.

Last week former care services minister Paul Burstow suggested a means test on winter fuel payments and the scrapping of capital gains tax relief on death to help fund a cap of £60,000.

Andrew Dilnot
Andrew Dilnot

Dilnot told Money Marketing last January that an increase to the cap on long-term care costs much above the £50,000 level could render the reforms ineffectual, after it emerged the Department of Health was considering setting the cap at between £50,000 and £60,000.

He said at the time: “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 mid-term review is also expected to outline plans for providing working mothers with support for child care costs to help them return to work, following the furore over changes to child benefit for higher earners.

Proposals for a single state pension as well as measures to help first-time buyers are also set to be announced later today.


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There are 12 comments at the moment, we would love to hear your opinion too.

  1. Good to have some certainty about costs, although there is no guarantee of quality.

    Perhaps it’s an opportunity to produce some sort of LTC product to bridge that £75k gap akin to a gift inter vivos?

  2. Certainty? Really?
    1. It’s “not going to cover accommodation or food” – and we don’t know how or who is going to work out where the dividing line between social care and these other costs.
    2. What’s going to happen when local authority liability kicks in in terms of the ridiculous horse trading on costs of rooms, family contributions, etc that goes on at present?
    3. When is this going to be effective?
    Not much certainty here.

  3. @Anonymous. Who says it can’t be domicilary care rather than residential? The article states 2015/16. A big question mark would be those self funders that are already paying before this date and beyond. Do they stop paying once they breach the £75k cap but before their capital has fallen below £22k?

  4. Owner of a little house 7th January 2013 at 9:58 am

    So if you have a million pound property you will be afforded Government protection. If however you live north of Watford, have worked all your life, paid the bills, paid the mortgage off on your £75000 property you will lose the lot!

    Equality is a wonderful thing

  5. Scott Taylor-Barr 7th January 2013 at 10:00 am

    Yet again another report conducted at huge cost, the results of which are then ignored.

    It would appear with a cap of £75,000 that it is only the quite wealthy who are going to see any real benefit in this – the Government have left themselves wide open for more accusations of being a party of privilege.

    LTC is going to become a massive issue over the next generation and a Government need to get a handle on it very quickly.

    Shame they seem to have missed this opportunity.

  6. The ‘bean-counting’ syndrome is always balefully present whenever the Treasury is involved, hence £75K, 50% above Dilnot, and ignores the crucial ‘pooling’ aspect.

    These people never, ever think out-of-their-tiny-Oxbridge mindset.

    For example, by using mechanisms to encourage famiy orientated solutions to Long Term Care, which would be better all round for our society in England.

  7. The annoying thing about this is that if £35,000 was the cap it would cost the government about £1.5 billion per year about 10% of what we pay to Europe for regulation that is ruining this country

  8. Brian Weatherley 7th January 2013 at 11:41 am

    Agree with his remarks or not, at least Sam de Zoysa has the courage to make his identity known. “Annonymous” is simp[ly a case of pooping of your jaw while avoiding any responsibility for the remarks made should they be rejected subsequently by more considered opinions

    Can we not have honest exchanges among ourselves?.

  9. Brian Wetherley – when news media, especially newpapers are quite happy use the ‘unattributable quote’ then why be concerned as to whether or not a person posting on this forum is anonymous?

    There are many reasons why somebody would choose to be anonymous – the key point is ‘does their post add any value to the debate?’

  10. There are still questions about exactly how this will work, but at last there will soon be something to work on for insurers, and for families to plan for.
    It seems reasonable that people pay hotel costs, and there will continue to be a choice of charges according to standard of care home, so that carefully chosen care can be made according to someone’s wealth.
    I’m waiting to hear:
    1. Will this be applied to care at home
    2. What level of assets will be set (now £23250) below which people to be fully funded.
    3. What level of care cost will be paid after £75K.
    4. Will £75k be made up from both care and hotel cost?
    Only then can we start to debate fairness.

  11. At least Govt sem to have woken up on this. However, the Dilnot recommendations appear largely ignored although the model looks like being followed albeit too far in the future.
    Chris’s observation about the stance on care at home as this is what most people want (as I know from personal experience) is well made.
    Product development still seems way off both in terms of time and clarity.

  12. Perhaps Mr Weatherley should appreciate a good book is judged by its content not the authors name

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