In this column on 28th June I expressed my hope that the issue of the reform of system of social care would be expedited by the appointment of Sajid Javid as the new Secretary of State for Health and Social Care.
I also questioned one of the principal motives for reform: what politicians often refer to as the ‘scandal’ whereby people have to sell their homes to pay for their residential care.
I have always taken the view that the main way that people save in the UK is by acquiring a home, and that paying for your residential care was a proper demand on your savings, which in so many cases means your home.
Of course, there are many other things we might have preferred to spend our savings on, including passing them on to our families, but if we need residential care, why should we expect the community to pick up the bill if we have a property that we could sell to meet the expense?
Any sense of unfairness arises, not from the assumption that we ought to pay for our care, but from the fact that we might have to but that others won’t. This is the same perception of unfairness that arises from any means-tested welfare system: the belief that you are penalised for having been prudent, but that the impecunious, profligate, or just less fortunate, get a free ride.
The Government’s proposals, announced last week, with a cap on care costs of £86,000 -after which taxpayers will meet any further costs, are designed to address the sense of unfairness.
Government’s critics however, appear to be attempting to ride two different horses at the same time: first they argue that it is immoral for taxpayers to be expected protect the inheritance of the relatively wealthy by preventing them from having to sell their homes to meet their care bills. Yet at the same time they argue that so many of them will have to sell their homes anyway, because relatively few will have the £86,000 readily to hand to pay for their bills before the taxpayer comes to the rescue.
The critics have fundamentally misunderstood one of the main purposes of the reform.
Consider our main motive saving: whist it may be prudent to save up against the possibility of lean times ahead; most of us save up for something positive that we want to get or to do, including passing such savings on to our children. I certainly couldn’t be motivated to save up for care costs, because my hope and expectation would be to never to have to be cared for.
On the other hand, rather than save up to meet unwelcome possibilities, we insure against them: We insure our homes against burglary, fire and flood. Equally, it would be sensible to insure against care costs in order to avoid having to sell our homes. The difficulty is that such insurance is not readily available because of the potential unlimited liability that might arise from many years in residential care. The purpose of the £86,000 cap is to quantify and fix that liability so that the insurance market can bring forward affordable schemes -should you wish to purchase one- to protect you from the first £86,000, and prevent you from needing to sell your home if you don’t have £86,000 to hand.
I hope it works.
Sir Desmond Swayne TD
