The problem has arisen because under the NHS and Community Care Act 1990, the Government decided that the 200,000 people living in nursing and residential homes in April 1993, when the Act took effect, should not be separately assessed for financial support.
They were provided with what is described as "preserved rights" to income support. The payments are means-tested and are only available once the claimant's capital is pounds 8,000 or less. They then have to apply to the Department of Social Security not to the local authorities.
All claimants in nursing and residential homes since April 1993 are dealt with by the local authority in which they live, who have the power to top up income support when it falls below the fees charged by the individual nursing and residential home.
But those on "preserved rights" the local authorities are prohibited from topping up. Instead, the "preserved rights" resident has to be moved to another home where the local authority is then allowed to help. Age Concern estimates that at least 44,000 elderly people are on preserved rights to income support, which local authorities are prohibited from topping up to meet steadily increasing nursing and residential home fees. It says: "They are trapped by this clause and therefore vulnerable to eviction. Even if they have families, the financial burden is likely to be too heavy for them to cope."
This part of the act was introduced to stop unscrupulous homes from increasing fees once the local authority began picking up the bill. But it overlooks, as in the case of Mrs Freedman, that such an upheaval is likely to take place when claimants are frail and at their most vulnerable. And rehousing does not always save money.
Age Concern cites one of many cases, that of an 84-year-old woman who entered a residential home in London in March 1992. When her savings reached pounds 8,000, she claimed income support but was providing the top-up from her own savings. The cost of the home was pounds 320 a week, and the shortfall between the maximum income support of pounds 267.10 a week (including her personal expenses allowance) and this charge was pounds 52.90.
The woman was evicted from the home in January 1995. The local authority was unable to find an alternative home at the income support rates. It assisted in finding a place in another residential home for the woman, at a cost of pounds 325 a week, pounds 5 a week more than if she had stayed at the previous home. The local authority is providing the top-up funds at a cost of approximately pounds 60 a week.
Arguing that the Government needs no more proof that the current system is not working, Sally Greengross, director-general of Age Concern, says the Government must urgently review its stance. But with Peter Lilley, the Secretary of State for Social Security, reported to be planning to slash the welfare bill by pounds 6.5bn, the Government is once again shifting long-term care for the elderly on to the private sector. Insurance companies, however, admit that current long-term care (LTC) contracts, like mortgage protection policies, cannot be afforded by those who need them most.
There are only a few insurers who will look at this highly specialist form of cover, namely, Commercial Union, Hambro Guardian, PPP Lifetime, Prime Health and Scottish Amicable.
To guarantee a pounds 1,000 monthly payment, a 67-year-old man must pay a monthly premium of pounds 80 or more, while a woman of a similar age must expect to pay around pounds 95 a month.
Even the Association of British Insurers has conceded that they are too expensive for those who need them most.