Karl McCartney: New care measures will help those who've worked hard
Recently, the Government announced a new package of support for the elderly to help them pay for their long-term care costs.
At the moment, many older people and people with disabilities face paying the limitless, often ruinous costs of their care with little or no assistance from the state.
While those with assets of less than £23,250 do receive support, those with assets above this level receive none.
This is desperately unfair, particularly for those who have worked hard all their lives to pay off their mortgage, to save for their future or to have something to pass on to their loved ones – only to see their property sold and their savings wiped out.
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This happens to more than 30,000 people every year or one hundred people every day.
This system sends out the wrong message: that you are better off not saving for your future because any savings will only disappear in a puff of smoke.
It also goes against a fundamental principle which I believe in as a Conservative – that we should support people who work hard and do the right thing.
If you have saved all your life, you should not be forced to sell the family home if you find yourself requiring expensive care in your old age.
There are two key elements to the new package to address this unfairness.
First, a cap on reasonable care costs at £75,000. Currently, the lack of a limit on care costs and the unpredictable nature of care needs leave many people facing vast bills, with almost one in five older people facing care costs of more than £75,000.
So from 2017, the Government will pay for care costs incurred by individuals over this level. This equates to £61,000 in 2010/11 prices, compared to the Dilnot Commission's recommended cap of up to £50,000. We have come as close to this as possible but have to recognise the extremely tough economic situation in which we find ourselves.
It's important to stress that the intention is not that people should have to pay up to £75,000 for their care costs. But by creating certainty that this is the maximum they will have to pay, they can then make provision through insurance or pension products so that they are covered up to the value of the cap.
Second, we will introduce new financial protection for those with modest wealth. The Government will step in earlier to pay a proportion of residential care costs, with the threshold more than quadrupled – from £23,250 to £123,000.
Taken together, the measures are expected to directly benefit an extra 100,000 people who would not receive support under the current system.
The vast majority of state support will be provided to the 40 per cent of older people with the lowest income and wealth. This is about protecting people with the greatest lifetime care needs, not the greatest wealth.
Given the state of the public finances that we inherited from Labour, we have to find the money to pay for these reforms. The package will cost the Exchequer £1 billion a year by the end of the next Parliament and will be met in part by extending the freeze on the Inheritance Tax threshold.
Only 5,000 additional estates will be brought into inheritance tax by this measure and this package is all about ensuring people do not lose an inheritance they have worked hard to pass on to their family.
The remainder will be funded from public and private sector employer National Insurance Contributions associated with the end of contracting out as part of the introduction of the Single Tier Pension.
By 2030, the number of people aged over 85 will double, and the number of people with dementia will exceed one million. As the number of older people with such long-term conditions increases, we need to become a society where people prepare and plan for their social care costs as much as they prepare and plan for their pension.
These plans will give certainty and peace of mind about the cost of care, making sure we can all get the support we need without facing unlimited costs, while also ensuring the most support goes to those in greatest need. They demonstrate our determination to help people who have worked hard, saved and done the right thing to prepare for the uncertain hand that fate deals to all of us in old age.