Ask almost any financial adviser about the current approach to long term care and they will provide a long list of concerns.
The term ‘logistical nightmare’ sounds like an appropriate description. It is one that applies to what will clearly be a very difficult time in a client or a family member’s life.
Advisers will know that there is a huge variation between the home nations and local authorities especially around financing. Ultimately that can have a big impact on what clients and their families experience.
One of the more frustrating aspects of care provision is that politicians and policymakers are fully aware that the system faces huge challenges yet time and again the development of an over-arching policy is discussed, debated and then delayed.
In fact, this pattern appears to apply whether the politicians concerned are from the left, the right or the centre of the political spectrum.
In 1999, in the heyday of New Labour, the Government set up a Royal Commission on Long Term Care chaired by Sir Stewart Sutherland with 11 other members including Lord Lipsey and the well-known agony aunt Claire Rayner.
The key recommendation was that personal care should be free for all those in need, leaving pensioners to pay ‘hotel’ costs for their accommodation.
At the time, there were heated debates about where nursing care really stopped, and ‘hotel’ accommodation started especially in the case of conditions and illnesses where someone could need care for a very long time.
But despite the Royal designation and the star power of its members, it was of little consequence as none of the Commission’s recommendations were implemented. A decade later, the Labour Government, arguably in its last gasp, suggested an NHS-style National Care Service. It was championed by then Health Secretary and current mayor of Greater Manchester Andy Burnham – and has often featured in subsequent political debates.
Next politicians turned back to experts. The Conservative Lib Dem Coalition appointed economist Andrew Dilnot to head what it described as a cross-party review into social care.
In 2011, the Dilnot commission recommended what it called a partnership model with the public - a much more generous means test and a lifetime ‘cap’ of between £25,000 and £50,000 on social care costs to ensure the state stepped in where people faced “catastrophic costs that most could not plan for”.
The funding would come from extending the IHT threshold freeze for several years.
What is not much remarked upon is that legislation enacting some of the Dilnot measures actually received Royal Asset in the last days of the Coalition. But in the 2015 election, the designated money was put behind a promise to allow homeowning couples to pass on £1m in inherited wealth through the creation and phasing in of the residence nil rate band.
At that point, it is easy to argue that this was all a little too complicated for the broader public to really get their heads around.
Yet the public did get a clear idea of the next policy proposal to the extent it may have wrecked Theresa May’s hopes of winning a working majority.
The Conservative manifesto promised to raise the threshold of personal assets at which people were eligible for state help with care costs from around £23,250 to £100,000. Dubbed the dementia tax by opponents, it clearly lost the Conservatives some support and was hastily dropped.
The issue hardly dominated the most recent election, yet it was discussed in some detail.
Labour’s policy-heavy manifesto advocated free personal care and a cap on personal contributions. The Lib Dems were proposing an increase of 1p in the pound on income tax at least partly to fund care as part of a general healthcare boost. The Conservatives, now of course elected, have promised to spend an extra £1bn a year.
That Conservative manifesto also promised to seek (another) cross-party solution accompanied by an ‘iron-clad’ promise from the Prime Minister Boris Johnson to resolve the issue during the life of the Government.
I would make one quite important point. It appears that there is a bit of drift in the definitions – in terms of care support potentially at home, and care in care homes. There are different systems - Scotland for example, has had free home support since the early 2000s and the Scottish Government wants to shoulder more of the cost for those in care homes in coming years. Northern Ireland has had integrated health and care structures since the 1970s, but that system appears to have growing financial and structural challenges. In all this, sometimes it is difficult to follow the promised money and identify just where it is helping.
But if politics is largely stuck, the economic, social and demographic picture is shifting and not for the better. Certainly, where it involves care in care homes, there is huge pressure.
Analysts LaingBuisson said late last year that 45 per cent of care home places are now funded by families not the state, up from 40% a decade previously while the difficult financial situation for local authorities has seen the number of local authority funded beds fall from 34,700 to 17,100 in the UK.
Health charity the King’s Fund suggested that late last year, vacancies in adult social care were rising, currently totalling 122,000, with around 9 per cent of care worker roles unfilled.
In the meantime, it is estimated that the families of 350,000 people have had to sell their home since that first Royal Commission.
All this takes place in the context of an ageing population. A study by the Lancet Public Health journal from 2018 suggested that 446,000 of the over 85s will need 24-hour care by 2035 and that a million over-65s will need similar care.
So a few thoughts for you in conclusion. First the public remain confused and they are right to be confused because there has been little leadership on this for two decades.
At the same time, the public are correct to be concerned because the level of state and private sector provision is falling as money remains tight while demand will inevitably increase.
One thing is clear – this adds up to huge cost pressure – and it will be an increasing factor to consider in long term financial planning. We’ll look at how advisers are approaching this in a subsequent post – your views are very welcome.
