Family finance woes extended as social care reform sidelined again

Yet again, loud promises of support over costs that strip generations of families have been reduced to placatory whispers over a £3bn bill

A single line in the Queen’s Speech yesterday morning stated simply: ‘Proposals on social care reform will be brought forward’ (AP)

Few things highlight the gap between the everyday lives of those who have and those who have not like the state opening of parliament.

The VIP velvet few of us will ever touch was on full show, slung across the shoulders of the powerful, even as the usual pomp and pageantry was curbed thanks to Covid.

But the centrepiece of the centuries-old ceremony was a speech that set the tone for what we mere mortals should expect, and not expect, from a government dedicated to boosting the coffers of the armed forces in the face of undefined threat for example, but not, as we already know, the wages of NHS staff fighting a very present danger.

Nowhere was that more evident than the minute statement on a subject that will affect the vast majority of us – social care

Held in the hand of a woman who will never have to worry about the cost of her own or relatives’ care were nine vague words that suggests the rest of us have another agonising wait for state support.

That wait, the financial world warned this week, will be as financially crippling as ever, especially in the wake of a pandemic that has battered incomes across the country.

The average cost of just an hour’s care in our homes coming in at £20, a week’s live-in support ranging from £650 to more than £1,600, and a room in a nursing home averaging £840 or more, according to the NHS.

Despite widespread assumptions across the generations that the state will cover these costs, the truth is that only those with less than £23,250 in savings will get help. That could include assets held in property if you need residential care, though no one will be required to leave and sell their home to cover costs if they are being cared for at home.

“The current system of social care funding is widely acknowledged as being unsustainable, yet proposed solutions have been few and far between from successive governments,” says Rachael Griffin, tax and financial planning specialist for Quilter. 

“Once again, social care changes have been promised by the government but fundamental reform has been kicked even further down the road.”

The government promised in its 2019 manifesto that it will seek cross-party consensus on proposals for long-term reform of social care, with the express aim of ensuring that nobody needs to sell their home to pay for the costs.

“But Theresa May’s tenure in office showed it is a poisoned chalice, and no doubt it is the cost of fundamental reform that has influenced the prime minister to kick the can down the road,” says Griffin.

“The Dilnot Commission, for example, calculated that their proposals would cost an additional £3bn a year by 2020-21. Whatever the solution eventually is, it will be expensive and a cost the chancellor will be looking to avoid for as long as possible.”

Throw in getting the UK’s finances back on a sounder footing post pandemic and the challenge for the government is even stiffer, adds Steven Cameron, pensions director at Aegon.

“But one of the key learnings from the pandemic is how vitally important it is to have a high quality, properly funded care system to protect some of our most vulnerable elderly. How that’s delivered and how it’s funded are both essential components of a long-term solution.

“The pandemic has shown just how vital it is to deliver consistently high quality care and dignity to some of our most vulnerable elderly. We’d welcome the government exploring how this can be better integrated with the NHS. We also need to end the current geographical lottery, providing adequate resources at local council level, reflecting their age demographics. It will also be vital to have long term stability, ideally with cross-party support on both delivery and funding.”

There are certainly plenty of ideas out there. But long-term book balancing to help battle the ultimate long-term funding crisis rarely appeals to the short-termists that observed the Queen’s Speech yesterday. Especially if it means properly addressing the financial inequalities playing out every day between Britain’s generations.

“The government needs to gain public and cross-party support for a deal to share costs between the state and individuals, based on their wealth. This needs to be fair across wealth bands and generations,” says Cameron.

“The government’s share needs to be backed up by sustainable and adequate funding, accepting this may involve raising taxes either on income or wealth. This is further complicated by the government’s 2019 election manifesto ‘triple tax lock’ commitment not to raise rates of income tax, national insurance or VAT.

“It could explore options concerning wealth taxes, or extend national insurance to earned income above state pension age, which is currently exempt,” he adds.

Another option would be to introduce a completely new tax, earmarked specifically for social care, possibly levied on those above a certain age. And caps on care costs, along with clarity over any additional charges are a must.

“Whatever solution is eventually in place, people will still need to think carefully about saving for their own care, as whatever is on offer is likely to be the bare minimum,” adds Griffin.

“Personal provision will make up the vast majority of how someone pays for the care they need, and it certainly won’t be a small amount.

“People should think carefully about not only saving for retirement but also for social care.”