Posted by: WealthIFA | July 10, 2011

The Dilnot Commission

So, the Dilnot Commission has finally published its report into long term care but, before we all go and get too excited we must of course remember that Lord Sutherland was commissioned to do almost exactly the same thing… and his report was published back in 1999.

The then Labour government gave themselves some breathing space and finally, in 2001, we saw the implementation of the recommendations…

Well, when I say implementation, out of the 20 or so recommendations, only around 3 or 4 actually made it through to the statute books.

There is no escaping the fact that the current long term care debate is one hot potato that the present as well as the previous government has to deal with but, as most people in the UK are now aware, the funding of adult social care needs to be adapted and overhauled and it needs to be done sooner rather than later.

The previous Government unveiled a white paper, instigated the Big Care Debate and launched the details for a National Care Service – this actually had a lot going for it, but sadly its proposers lost the general election and the shiny new transformation was condemned to the waste bin. 

Instead of continuing with the National Care Service, the coalition, wanting to make its own mark, asked Andrew Dilnot to revisit the subject (again).

The report has just two main criteria that affect the elderly in care and, unlike the Sutherland report that looked at ideals, Dilnot actually talks money although there are a range of figures:

  1. a suggested cap on care at between £35,000 – £50,000
  2. a change to the means test threshold to around £100,000 (from the current £23,250).

The cap on care, whilst open to various interpretations, means that self-funders will be liable to cover the first few years of their care but, what isn’t made clear is, what monetary value the “care element” will be set at.

A “premium” care home could charge many times more than a “standard” one.

The figures used in Dilnot’s case study (Alice), suggest a figure of £18,000, with Alice contributing the rest (remember the cap is only on care, not accommodation, food, room facilities, hotel type services, activities and outings etc) from her pension and other allowances.

The full weekly cost of Alice’s fees are very similar to the current support offered by the Local Authority, but a long way from the actual costs of a “premium” care home, which would suggest that a ceiling of £10,000 per annum for these types of services is again only being aimed at the basic or “standard” care home.

Reading between the lines, even if the proposals are accepted at the stated higher levels, a self-funder today in a good care home will still be a self-funder in 2014 and beyond.

That said the changes will mean that:

  1. More people/families facing the need for care (post 2014) will be able to budget and plan ahead more clearly. The various methods of creating an indefinite income will become more attractive and affordable for more people.
  2. Younger people of 60+ will be able, as well as encouraged, to take responsibility for planning ahead; known ground rules will enable the financial services industry to develop and make available new, more practical ways of insuring for the future. These new products should move away from the older, now defunct ADL (activities of daily living) claim criteria and instead could use medical confirmation linked to care home residency and introduce a deferred system similar to the time frame of the care cap.

Of course, this assumes that people are seeking advice from appropriately trained and skilled financial advisers.

Thankfully Dilnot has recognised the importance of this, and has recommended a more “joined up thinking” liaison between the Government and the Financial Services Authority (FSA).

This is great news, but to really take advantage of the wealth of experience out there, both parties must utilise the skill sets and knowledge of the advisers actually advising families now.

What is vitally important to acknowledge is that the families of people in care now, shouldn’t put off planning for the continued funding of their relatives care fees.

Before anything changes the proposals have to be accepted, the White Paper published (Easter 2012) and whatever the new rules are, they won’t hit the statue books until 2014 at the earliest, meaning that it could be 2016/17 before anyone will have exhausted their cap.

And this all assumes that we do not have a change of Government in the meantime…

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