£35,000 cap plan for elderly care reform

No one should have to pay more than £35,000 towards long-term nursing care in their old age, a report into the fundamental restructuring of Britain's social care said yesterday.

Those with assets of less than £100,000 would not have to contribute towards their care, under proposals put forward by the Commission on Funding of Care and Support, chaired by the economist Andrew Dilnot.

However, the ambitious plans may yet be watered down by the Treasury, who fear that the increased costs could hamper efforts to reduce public sector spending or require raising taxes.

The other main proposals outlined by the Dilnot report include:

* Insurance companies would be encouraged to offer products to cover this defined cost so people could manage the risk of care costs in the future.

* Anyone unable to afford care charges without selling their home would be allowed to defer payments until their death, at which point it would be taken out of their estate.

* Making individuals in residential care pay towards the cost of food and accommodation to a maximum of £10,000 a year.

The suggestion that the Government should introduce raise taxes to pay for the proposals is likely to prove most controversial. Mr Dilnot suggests that a "specific tax increase" to cover the cost to the Treasury could be introduced adding it would "make sense for this to be paid at least in part by those who are benefiting directly from the reforms".

"In particular, it would seem sensible for at least a part of the burden to fall on those over state pension age," the report states. "If the Government decides to raise additional revenue, we believe it would be sensible to do so through an existing tax, rather than creating a new tax."

Mr Dilnot said there would be "disappointment" if a white paper on the recommendations was not published by next Easter.

Dame Jo Williams, chair of the Care Quality Commission, who was also on the Commission said she would be "disgusted" if the Government did not act on their recommendations.

Mr Dilnot described the existing system, in which many people risk losing the majority of their assets, including their home, to pay for care as "confusing, unfair and unsustainable" and in urgent need of reform.

"This problem will only get worse if left as it is, with the most vulnerable in our society being the ones to suffer," he said. "By protecting a larger amount of people's assets, they need no longer fear losing everything."

John Healey, Labour's shadow Health Secretary, said:"Our concern is to protect the one in 10 of us who have to pay over £100,000 for the costs of care in older age. We are willing to talk and work with all other parties. This is a once-in-a-generation chance and David Cameron must now show that, like Labour, he wants to build a better, fairer and lasting system of care in our country."

Charities urged the Government to act on the Dilnot recommendations after years of stalled reforms. Jeremy Hughes, chief executive of the Alzheimer's Society, said: "This report could bring to an end the scandal of the Dementia Tax where every year tens of thousands of families are left to pay all their care costs whilst other diseases are paid for by the NHS."

Case study: 'My mum sold her house to pay for care'

Peggy Belcher, aged 92, suffers from Alzheimer's. With help from her daughter, Ann Reid, she sold her house to pay for her care costs, which have so far run to around £170,000.

Mrs Reid, 65, said: "That sort of money is a lot to have to raise for anything. I do not regret spending it because my mother is beautifully cared for but, if she benefited from the type of limit the report refers to, that would be a great help.

"It is not her fault she is in this situation... I don't mind paying out for quality care... but the costs are becoming very difficult. The system also means that people who have to go into care who have property are effectively subsidising those who do not.

"I worry about the long-term situation in general. More people should be able to stay in their own homes and, where they can't, they should be able to rely on money from National Insurance contributions if they are not lucky enough to be able to pay."

What would change

How does care for the elderly work at the moment?

For someone with assets of less than £14,250 residential care will be funded by their local authority. Those with assets (including their home if they live alone) of more than £23,250 pay the full cost of care.

What does Dilnot recommend?

The report suggests the £23,250 asset threshold should be increased to £100,000 and the total lifetime contribution of any individual toward their care be no more than £50,000. It also suggests allowing people to defer payment until death to avoid having to sell a property. Insurance companies will be encouraged to offer policies covering the £50,000 contribution.

Will it happen?

All the political parties agree that reform of social care is long overdue. But politicians (including different members of the Cabinet) disagree on how it should be done. Dilnot's ideas would cost more than £3bn a year more by 2025 than the current system and ministers will be reluctant to increase taxes or reduce spending in other areas to pay for this.

In the long run the Government is likely to adopt most of Dilnot's broad themes but the Treasury will then tinker with the thresholds to reduce the total cost to the taxpayer. This means individuals are still likely to have to pay more for their care than Dilnot's proposals would suggest.