Elderly people in England could be forced to pay up to £20,000 to guarantee a basic level of social care under long-awaited proposals published by the Government yesterday.
A compulsory state insurance scheme is one of three options for funding a new "national care service" designed to end the present system under which some elderly people have to sell their homes and use their life savings to pay for long-term care, while others pay nothing.
Andy Burnham, the Health Secretary, admitted that current provision was a "cruel lottery" and said he wanted to extend the principles of the National Health Service to social care to create a system which was "fair, simple and affordable" for everyone.
But he stopped short of promising extra spending by the Government. Its share of funding a basic standard of care could be financed by scrapping benefits such as attendance allowance for new claimants, which could prove controversial. It is paid to 1.6 million people aged 65 or older who need help to stay in their own homes, and costs £4.4bn a year.
The national care service would provide help with needs such as dressing and washing and moving around at home, but people needing residential care would continue to pay for accommodation and food themselves, whether or not they had taken out insurance. However, the proposed new system would allow care home fees to be deferred and paid after death. A switch to an insurance-based system would mean that some people pay for a service that they will never need.
Although ministers will set out their preferred option later this year, there is no prospect of legislation before the general election and the plan will feature in the Labour manifesto. If the party retains power, the changes would be phased in from 2014.
The Tories accused Labour of "dithering" for 12 years ever since Tony Blair said he did not want his children brought up in a country where old people had to sell their homes to fund their care.
Under a "partnership model", people would have up to one-third of their basic care costs met by the state, and pay for the rest themselves – at an estimated cost of between £20,000 and £22,500. The less well-off would have a higher share met by the state, while the poor would continue to get their care free.
A voluntary insurance system – the second option – would give people the same basic level of care but allow them to take out insurance to cover the rest, for a payment of between £20,000 and £25,000. The final option is a compulsory "comprehensive model", in which everyone over retirement age would pay between £17,000 and £20,000 into a state insurance scheme and then have their basic care costs met by the state.
People could pay their care insurance either through a lump sum on retirement; by deferring their state pension; by paying instalments during their retirement; or having the money deducted from their estate when they die.
Launching a major public consultation exercise, Mr Burnham conceded: "We would need a broad consensus to develop across the country about one of these options before any one of them can be taken forward."
The Health Secretary ruled out full state funding from general taxation, saying it would put too great a burden on people of working age. Ministers feared the move would be portrayed as a "stealth tax". They also rejected the current system under which people pay their own way – seen as unfair to those who need years of expensive care because of conditions such as Alzheimer's.
Mr Burnham told the Commons: "For the first time, everyone, regardless of their bank balance, would get some help to pay for their basic care; everyone would get the same treatment wherever they live and everyone would get advice and information to help them find the care that's right for them."
A Green Paper published yesterday said a typical 65-year-old could expect to need care costing £30,000 throughout their life. For one in five people, the figure would be less than £1,000. For another fifth, it would be more than £50,000. For those with complex problems such as dementia, it could rise to more than £200,000.
The plan drew criticism from the Conservatives, with Andrew Lansley, the shadow Health Secretary, saying: "We do not need a nationalised social care service... We don't need to start another debate. We need a decision, and we need serious, costed proposals to be the basis of that decision."
The plan was welcomed by charities representing people who rely on social care, but the National Pensioners Convention criticised ministers for rejecting what it called "the fairest option" – using general taxation or national insurance to provide services free at the point of need. Dot Gibson, its general secretary, said: "Suggestions that people should pay lump sums or take out insurance won't tackle inequalities in the system."
The charities Age Concern and Help the Aged expressed concern about proposals to abolish attendance allowance and said the cost of care should be shared among different generations.
In Scotland, everyone who meets the criteria gets free social care, although the threshold includes only those with the most severe needs. Wales and Northern Ireland, which both use means-testing like England, are considering reform.
Wilfred and Florence Stafford: 'It's sad... their life savings are gone'
Jean Hall, 64, is the only child of Wilfred Stafford, 91, and Florence Stafford, 89, both of whom have dementia. She has been forced to sell her parents' house to pay for their residential care home, which costs £762 a week.
Her parents had lived in their previous home for 26 years. Jean put the house on the market in July, when it was valued at £130,000, but since the recession hit it has depreciated in value and she has now been forced to sell it for £107,000.
"It is sad to think that mum and dad had worked hard all their lives and that all their life savings have been used up," she said. "It is not right that all their money should be fizzled up. I know of people whose care home fees are paid for by their local authority because they had been living in a council property – this is not right. It should be the same for all older people."
Her husband, John, 66, said: "If they knew where all their money was going, they'd be devastated. At first we had their savings to put towards their care, but all that's gone now, so they've just got the house.
"When I get to their age I won't be expecting the Government to give me something for nothing, but when you've paid your taxes and your national insurance all your life, you feel like you should get something back when you need it. Nobody can put a figure on how long they're going to be in care. People are getting healthier and living longer, and I know some people who have spent 15 or 16 years in a care home – how can you allow for that sort of time?"
Helping the aged: What are the options?
A partnership scheme While everyone would be entitled to having a slice of their care costs paid for by the state, the less well-off would qualify for more government help with their care and support costs. The very poorest would continue to qualify for free care. However, it would mean some people with high care and support costs would have to raise their own funds through savings or selling their home.
An insurance scheme Everyone would still be entitled to having some of their care costs met by the Government but, under this system, they would be helped to meet any additional costs through a nationwide insurance scheme. Private insurance firms could be brought in to help run the scheme, with the public given the option of paying into it through regular instalments or in a lump sum.
A comprehensive state system Those over retirement age would be compelled to pay into a state scheme if they could afford to do so. Those who qualified for state support for their care would receive it free. Contributions would vary in relation to the size of each person's savings and assets, making it more affordable for the poorest. A one-off figure could be drawn up, allowing everyone to know how much they need to save.Reuse content