PENSIONSANDSAVINGS.COM

• Government plans to reform social care are a start, but nowhere near enough to address the scale and scope of the crisis.
  
• Stark unfairnesses remain, with inadequate funding for urgently needed staffing improvements (£500million is just £300 per person).
  
• There is inadequate funding for prevention measures.
  
• The main part of the reforms will help protect the assets of the wealthiest families, not those living in areas with lower property values.
  

With the Health and Social Care Bill coming over to the Lords, there is an urgent need to rise to the challenges of this major crisis. This is a huge issue, with so many aspects and this is my first note on the subject.  It explains why, although the measures are a welcome start, major problems remain unaddressed and the crisis is far from being resolved.

The Government deserves credit for at last producing its White Paper. However, the measures will not ‘sort out’ social care. The reforms perpetuate unfairness in the current system and leave many systemic failings unaddressed.  They do not ensure more money will be set aside by individuals for future care needs and the public funding being allocated is far too little to make meaningful differences in areas such as staffing and prevention.

Here are ten reasons why the proposed social care reforms fail to rise to the many challenges which must be addressed before we can claim to ‘sort out’ the worsening social care crisis.

1. The measures do not resolve the inter-generational and intra-generational unfairnesses in the present system.
2. The new health and care levy does not ensure broad risk pooling, and does not spread costs across the whole of society, which would bring in more revenue.  The 1.25% National Insurance levy falls more heavily on lower income workers and does not require pensioners living on generous pensions, or those with buy-to-let property income to pay anything at all.
3. The majority of the money going to social care will fund the £86,000 cap and higher means-test level. This benefits wealthiest families the most. A monetary cap, rather than proportion of assets will take a much lower proportion of assets from a family with worth, say, £2million, than those whose only asset may be a family home worth £150,000. The new cap system will still see them lose most of this.
4. The reforms do not ensure parity of esteem between health and social care staff and are inadequate to address the staffing problems, including high staff turnover, high vacancy rates, low morale, poor working conditions and lack of adequate career progression. With 1.5million people working in social care, £500million extra gives just £300 per person.
5. The artificial distinction between health care and social care remains in place.  Even though both are about people who need care due to their health problems, but only some illnesses are considered to be health matters. Social care issues will remain second-class and expensive services, while NHS care  is free.
6. The reforms do not ensure local authorities pay enough for publicly-funded care home residents. The only commitment is to ‘move towards’ councils paying a fair rate, but this leaves private payers still cross-subsidising council shortfalls.  The CMA estimated they pay 41% more than council-funded residents in the same care home.
7. The burden of paying for care will still fall disproportionately on those people who actually need social care and do not qualify for NHS care.
8. Councils may still have to ration social care increasingly severely as numbers of older people needing care keep rising.  Only those with substantial or critical needs now qualify, leaving out those with moderate needs who were previously helped. Wealthier families have the resources to pay for care sooner, but the new system leaves less well-off people with unmet needs.
9. The measures will not require improved transparency standards and financial strength, do not place limits on debt levels or impose controls on payments to offshore companies that own care home and which can avoid tax.
10. The reforms do not incentivise people to set money aside for their future care needs. All care funding is only at the point of need, rather than planned in advance. With an ageing population, it is clear that the numbers needing care will rise significantly in coming years as the baby boomers are just now entering their seventies. Many of them have pensions and ISAs or other savings that could be earmarked for later life care needs, but there are no proposed incentives to use their ISA savings as a Care ISA, for example, allowing £100,000 per person to be passed on free of Inheritance Tax as a Care ISA for the next generation or perhaps allowing tax free pension withdrawals for money spent on care. This would help people plan their assets to include consideration of care, but in the meantime, many pensioners will spend their ISAs or pension funds on cars, cruises or gifts and risk falling back on the state for care later.