Andy Burnham has recently reignited the debate around social care, arguing that care should be ‘free at the point of need’, much like the NHS. Recent reports suggest he remains supportive of a National Care Service approach and regards social care reform as a major priority.
It is an appealing idea. Most people would agree that if someone reaches a point in their life where they need care, whether at home, in residential care or in a nursing home environment, they should receive the support they need. The difficulty is that ‘free at the point of need’ does not mean free. The NHS is free when we use it, but somebody still pays. The same would almost certainly be true of any future social care system. The cost does not disappear. It simply moves from the individual to the taxpayer, or to some other form of collective funding.
Governments have been wrestling with that question for over twenty-five years. The Royal Commission on Long Term Care looked at the issue in 1999. More than a decade later, Andrew Dilnot’s Commission on Funding Care and Support concluded that the existing system was confusing, unfair and unsustainable, proposing a partnership between individuals and the state, including a cap on personal care costs. Then came Boris Johnson’s promise to ‘fix social care’ and the introduction of the Health and Social Care Levy through increased National Insurance contributions. Yet despite countless reviews, consultations, reports, commissions and political promises, the fundamental issue remains unresolved.
It does not mean reform will not happen. It may well happen. But if history tells us anything, it is that identifying the problem is the easy part. Agreeing who should pay for the solution is rather harder. Should the taxpayer fund it? Should those with significant assets contribute more? Should there be a dedicated social care levy? Should housing wealth continue to play a role? There are no simple answers, which is why so many proposed solutions have struggled to make it from policy paper to reality.
From a financial planning perspective, there is a separate issue. People still need to make decisions today. Planning for care is one of the most difficult areas of financial planning. Nobody knows whether they will need care, what type of care may be required, how long it will last or what the cost might be. Unlike retirement, there is no obvious start date and no straightforward way of calculating the amount required. There is also no widely adopted pre-funding solution in the UK that removes all uncertainty.
As advisers, we are often dealing with practical realities rather than perfect solutions. One of those realities is that care can be extremely expensive. Where a property is not disregarded for means-testing purposes, it is not unusual for the family home to form part of the funding solution. In many cases, the main residence – the home – is sold and the proceeds used towards care fees. That can be difficult for families to accept, but it remains a common feature of the current system.
Could things look different in the future? Even if there is broad political agreement that reform is needed, there would still need to be a consultation period, debate, legislation, implementation and funding arrangements. Prime ministers change, governments change, priorities change and legislation changes. Social care reform has rarely followed a straight line. The history of the last twenty-five years demonstrates that clearly enough.
For that reason, I think it would be unwise to assume that a fully state-funded care system is just around the corner. Personally, I would rather see clients plan on the basis that they may need to contribute towards at least some of their own care costs, whilst retaining the flexibility to benefit from any future reforms if they arrive.
If you are currently funding care for yourself or a loved one, or if you are acting as an attorney under a Lasting Power of Attorney and would like to discuss the financial implications, please feel free to get in touch. Every family’s circumstances are different. While there is rarely a perfect answer when it comes to care funding, a conversation about the options available now can often provide valuable clarity at what can be a difficult and emotional time.
