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“If not Dilnot, then what?”
England’s choices for the care crisis
James LloydDirector, The Strategic Society Centre
Tuesday May 29th, 2012
‘The Roadmap: England’s choices for the care crisis’
Published May 17th, 2012
Download at www.strategicsociety.org.uk
Unprecedented fiscal crisisDouble-dip recessionUnknowable eurozone uncertainties…and the social care system at breaking point.
What decisions will policymakers have to make?
Spending DecisionWhat will the state spend on care and
support in future and how will this money
be spent?
Spending DecisionWhat will the state spend on care and
support in future and how will this money
be spent?
Funding DecisionWhere will the
money come from to fund spending
on care?
Spending DecisionWhat will the state spend on care and
support in future and how will this money
be spent?
Funding DecisionWhere will the
money come from to fund spending
on care?
Current system
Spending DecisionWhat will the state spend on care and
support in future and how will this money
be spent?
Funding DecisionWhere will the
money come from to fund spending
on care?
Current system
Free personal
care
Spending DecisionWhat will the state spend on care and
support in future and how will this money
be spent?
Funding DecisionWhere will the
money come from to fund spending
on care?
Current system
Free personal
care
‘Capped cost’
model
‘Capped exclusion from means-tested support’
No one will miss out on more than £35,000 of council support because they are wealthy. Reaching the ‘cap’ still determined by family care + local decisions on level and form of support.
Increase in Upper Capital Limit (charging threshold) for residential care up to £150,000
But policymakers may still have concerns:
Funding – how will it be paid for? Is it worth doing ‘on the cheap’?Feasibility – will it work in practice?Outcomes – no overseas evidence or pilots.Risks – Treasury wary of government making promises.
So if not Dilnot – and assuming we do something… then what?
Spending DecisionWhat will the state spend on care and
support in future and how will this money
be spent?
Funding DecisionWhere will the
money come from to fund spending
on care?
Current system
Free personal
care
‘Capped cost’
model
Spending DecisionWhat will the state spend on care and
support in future and how will this money
be spent?
Funding DecisionWhere will the
money come from to fund spending
on care?
Current system
Free personal
care
‘Capped cost’
model
Other models of
partnership
Other models of ‘partnership’
First – put these models in context…
Free personal care
Current system
Free personal care
DilnotOther ‘partnership’ models
Current system
What are the ‘other models of partnership’?
Potentially – lots of options
Two stand out:
1) Co-payments/‘Wanless’33% of assessed personal care costs funded by councils, regardless of meansBroadly costs the same as ‘Dilnot £35k’
2) Raise means-test threshold/‘Means-test Plus’Raise Lower Capital to £150,000Costs slightly less than ‘Dilnot £35k’Broadly same outcomes in terms of asset protection as DilnotVery easy to implement
Key points: Different pros and cons
Each just represents different settings of the ‘control dials’ of council support
Like Dilnot, costs can be dialled up or down, depending on generosity
Different models are not mutually exclusiveDilnot + Wanless
Key points: Different pros and cons
Each just represents different settings of the ‘control dials’ of council support
Like Dilnot, costs can be dialled up or down, depending on generosity
Different models are not mutually exclusiveDilnot + Wanless = ‘Walnot model’
So if not Dilnot, then what are the options?
Do nothingDifferent ‘partnership’ model
But all this will ultimately be determined by the Funding Question…
The Funding Question…
…Where will the money come from to fund spending on care and support?
Costs of current baseline system going forward + cost of new ‘partnership’
Spending DecisionWhat will the state spend on care and
support in future and how will this money
be spent?
Funding DecisionWhere will the
money come from to fund spending
on care?
Current system
Free personal
care
‘Capped cost’
model
Other models of
partnership
Spending DecisionWhat will the state spend on care and
support in future and how will this money
be spent?
Funding DecisionWhere will the
money come from to fund spending
on care?
Current system
Free personal
care
‘Capped cost’
model
Other models of
partnership
General taxation
NHS Care & support budgets
Universal benefits
New taxes
But as well as public spending choices, there may be ways to leverage more private sources of funding for the care system…
Spending DecisionWhat will the state spend on care and
support in future and how will this money
be spent?
Funding DecisionWhere will the
money come from to fund spending
on care?
Current system
Free personal
care
‘Capped cost’
model
Other models of
partnership
General taxation
NHS Care & support budgets
Universal benefits
New taxes
Spending DecisionWhat will the state spend on care and
support in future and how will this money
be spent?
Funding DecisionWhere will the
money come from to fund spending
on care?
Current system
Free personal
care
‘Capped cost’
model
Other models of
partnership
General taxation
NHS Care & support budgets
Universal benefits
New taxes
Pre-funded
insurance
Disability-linked
annuities
National Care Fund
Pre-funded care insurance
No country in the world has a properly functioning market.
Multiple demand and supply-side barriers. + extra barriers unique to England.
How much would be brought into system? Conservative estimate: £0.5 billion by 2025.
Disability-linked annuities
Lots of demand side barriers: Only ‘DC’ saversMost have low value pension potsExisting bad annuitisation decisions (single-life; no inflation protection)
Conservative estimate: £0.3 billion by 2025
National Care Fund
Different versions… but a state-sponsored insurance scheme for personal care costsCan sit on top of Current System, Wanless, Dilnot, etc.Not ‘compulsory’ taxation, but overcomes demand-side barriers to private insuranceEnable people to use property wealth to insure themselvesCan become compulsory overtimeKeeps risks with private sector
Estimate of revenue: around £2.6 billion by 2025
In conclusion: if not Dilnot, then what?
Do nothingAnother model of ‘partnership’
But whatever happens, we have to talk about where the money comes from.
James LloydDirectorThe Strategic Society Centre145-157 St John Street LondonEC1V 4PYjames.lloyd@strategicsociety.org.ukwww.strategicsociety.org.ukTwitter: @__SSC
The Strategic Society Centre is a registered charity (No. 1144565) incorporated with limited liability in England and Wales (Company No. 7273418).