Another take on long-term care costs - The RU Group

Another take on long-term care costs

Long term care costs - couple making a heart shape with their hands

The funding of long-term care is an issue that hasn’t been resolved despite multiple attempts.  A Royal Commission on the subject was established in 1997 and reported in 1999. Its proposals were rejected by the Labour government at the time as too costly to deliver.

Since that date there has been a number of reports, reviews and even another Commission report. The issue with long-term care is not just a financial one – over the past 20 years the system has become inconsistent across the UK, with Scotland providing free personal and nursing care which the rest of the UK does not.

The last attempt to introduce a new system for long-term care in England did manage to reach the statute book, but its start date was deferred. The scheme was then abandoned entirely, shortly after the 2017 general election.

That election featured a rapidly withdrawn proposal from the Prime Minister – dubbed a ‘dementia tax’ by opposition parties – that would have allowed everyone to retain £100,000 of assets, regardless of their total care costs. After the election a green paper on care funding was promised, but it too has suffered frequent deferrals and, after several missed deadlines, is now only due to be published “at the earliest opportunity”.

 

Total spend by type of care

Care type

Average weekly cost

Domiciliary

£252

Residential

£617

Nursing

£856

Source: Fixing the Care Crisis CPS April 2019

Into this limbo-land another paper has now emerged. This one came from a think tank, the Centre for Policy Studies, which is closely linked to the Conservative Party. The paper’s author, Damian Green, is a former Secretary of State for Work and Pensions and Chair of the All-Party Parliamentary Group on Longevity. His ideas include scrapping the current means test and, in its place, providing a Universal Care Entitlement (UCE) paid by the state, which individuals could top up from their own resources and private insurance.

The main way of funding would be by an extra 1% on National Insurance Contributions for those aged over 50. However, it has been questioned whether this would produce enough revenue, given the existing funding shortfalls.

For the foreseeable future the key solution remains to continue making sure your retirement provisions are sufficient to cover the quality of care you may need in later life.

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