MPs are calling on the Government to work with industry to create a viable market for financial products able to fund long-term care costs in the wake of the Dilnot Commission.
One of the Dilnot Commission’s recommendations was to place a cap of between £25,000 and £50,000 on the amount an individual pays for social care costs before the state steps in. It was hoped this limited individual liability would help create a market for financial products.
In a report into social care, published today, the health select committee says the Government should accept the proposal. But, amid warnings given to the committee by the ABI and Partnership that the cap might not provide the fillip needed to the market, it says the Government should set out how it will make sure products are available to cover the costs placed on individuals.
It says: “The Government should clarify the likely market for pre-funded insurance, equity release and immediate needs annuities, as well as pensions-related products and other products. It should also articulate how it will work with the industry to stimulate the market for those products.”
Despite claims from care minister Paul Burstow that there is no funding crisis in social care, the report says the Government must “face the issue” of the funding gap.
It says: “The Government must face the issue of the existing “funding gap” in social care services, i.e. the gap between the number of people who need care (and the level of their care need) versus the amount of money that is currently in the system to deal with their needs.”
Safe Home Income Plans director general Andrea Rozario says: “This is extremely important. How are the Government and financial services industry to come up with solutions to funding care without a full idea of the scale of the problem?”
The report says the Government should accept Dilnot’s proposal of a cap on individual liability but wants the idea of expressing the cap in terms of a length in time, rather than a cash sum, to be revisited.
It says: “The Dilnot Commission considered this approach and rejected it on the grounds that it would make the actual cost of the individual’s contribution dependent on the acuity of their care needs during the period involved. The committee recommends the Government should look again at the principle in its progress report on funding, ensuring the equivalence of care standards before and after the cap is reached.”