A Strong Voice for Croydon Central - Gavin Barwell MP
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Helping the elderly pay for their long-term care
13/02/2013 08:55:00

On Monday, the Secretary of State for Health, Jeremy Hunt, announced more generous support for elderly people struggling to pay for their long-term care.

This is an issue that many of my constituents worry about. None of us know what care we might need towards the end of our life. Many of us will die without needing to go into a residential or nursing home - we might have a sudden illness or we might have family members who are able to care for us. Others might have a short stay in a residential home. But some of us will need a long stay in a nursing home and that can be very expensive.

At the moment, anyone with assets over £23,250 gets no support from the government. As a result, over 30,000 people every year who have worked hard all their lives to build up something to pass on to their loved ones find that they have to sell any property they own and use up their savings. This sends out entirely the wrong message: that if you work hard and save for your or your family’s future, you may end up little better off than someone who hasn’t bothered to save a penny. Rather than supporting those who do the right thing, we are penalising them.

The Government has already made some changes. From 2015, people will be able to defer the payment of care costs so that no one need sell their home to pay for their care during their lifetime and there will be a national minimum eligibility threshold to end the lottery that can see support provided in one area but not in another.

But we clearly need to do more and on Monday Jeremy announced two important changes to make the system fairer.

First, the Government will cap care costs so that people can have certainty about the maximum amount they will have to pay. From 2017, it will pay for care costs over £75,000. This equates to £61,000 in 2010/11 prices, compared to the Dilnot Commission’s recommendation of £50,000. The Government would have liked to set the cap at the level Dilnot recommended, but given the financial pressures the country faces that wasn’t possible. This will help a significant number of people - almost one in five older people face care costs of £75,000 or more.

Second, the Government will step in earlier to pay a proportion of care costs. The threshold over which you get no help will be more than quadrupled from £23,250 to £123,000.

The Government will also take forward other crucial reforms proposed by Dilnot, including free care for those who turn 18 with eligible care needs and a lower cap for people of working age who develop care needs before state pension age.

These changes will cost the Government £1 billion a year by 2020. Given the financial mess that we inherited from Labour, there’s no money sitting around to pay for this so the Government has had to find savings elsewhere. Some of the money is coming from the additional National Insurance contributions that the Government will get as a result of the end of contracting out due to the introduction of a single state pension. The remainder will come from freezing the Inheritance Tax threshold. The Government’s justification for this is that this is about ensuring that people have an estate to pass on to their loved ones, but it is still a pretty bitter pill for Conservatives to swallow. Many of us want to see the threshold increased so that middle income families don’t have to pay this tax.

Arguments over how it is paid for aside, this is another example - as with our pension system - of this Government making long-term reforms that Labour ducked while they were in office. By 2030, there will be twice as many people aged over 85 and the number of people with dementia will exceed one million. More and more people are going to need expensive care towards the end of their lives. As individuals we need to prepare for that just as we prepare for retirement by making pension contributions during our working lives. But it is difficult to do that if you are uncertain about what costs you might face. Monday’s announcement gives people certainty about the maximum cost they will face and by doing so will encourage a market in insurance products. And it focuses help on those in greatest need and better protects those who do the right thing. It's a big step in the right direction.

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