Fairer Care Funding Report

8/6/2019 Fairer Care Funding Report

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The Report o theCommission on Fundingo Care and Support

July 2011


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Volume I

The Report o theCommission on Fundingo Care and Support

July 2011


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The Report of the Commission on Funding of Care and Support

Foreword

It is a matter or celebration that people are living longer. For many,these are extra years o good health and quality o lie. For others whose

care needs grow, we see much ear and uncertainty. Caring or andsupporting each other should be something to celebrate. In the lie andwork o individuals and carers we can see dignity and independence made

possible, and much that is good about our communities and society.

Over the last year we have been talking to people and collectingevidence, and we have been told, again and again, that the system wehave or unding care and support is broken and needs to be xed.Care is the one major area o our lives where, at the moment, thereis no way or people to protect themselves against the risk o high

costs. We need a new system so that, instead o being earul aboutthe nancial consequences o needing care, people can plan andprepare or the uture. And those with a care and support need nowshould be better supported. Our reorms need to bring together publicunding, private unding and unpaid care in a new, air and eectivesharing o responsibility.

We outline in our report a new model which, we believe, delivers onthis vision.

Everyone who receives their care or ree now will continue to do so; andwe are proposing a cap, so that everyone else is protected rom extremecosts, as they are in every other major area o their lives. More workingage adults will not have to pay any charges, and younger people will notbe subject to a means test.

We propose a signicant increase in the threshold at which meanstestedsupport is taken away, so that extra protection is given to those with thelowest incomes and wealth.

We recommend a shit to a new national eligibility threshold, to tacklethe extremes o the postcode lottery, and better assessment processesor both those needing care and their carers. We want to see signicantimprovement in the provision o inormation and advice, and more

joinedup working across the whole care and support system health,housing, benets and adult social care.

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This is a set o proposals that will concentrate help on those with thegreatest needs, give peace o mind to all and create a new partnershipbetween the public and private sectors. Individuals with care needs,carers (both paid and unpaid), the nancial services sector and thepublic and voluntary sectors will all have a part to play. Together we

can help people achieve the outcomes they want, oering choice anddelivering services shaped around individuals and their amilies.

Our system o unding o care and support is not t or purpose, andhas desperately needed reorm or many years. We were delighted to beasked to advise on this, and believe that our report sets out a way orwardthat is air, eective and sustainable. There is a real chance to create abetter system. Now is the time to act.

Andrew Dilnot

Chair o the Commission on Funding o Care and Support

Lord Norman Warner

Commissioner

Dame Jo WilliamsCommissioner


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Contents and scope o the report

Summary o key fndings and recommendations 5

Chapter 1: Why the system needs to change 10

Chapter 2: A better, airer unding system 19

Chapter 3: The rationale or our model 29

Chapter 4: Making the system work or people 37

Chapter 5: The wider care and support system 56

Chapter 6: The impact o our proposals 62

Chapter 7: Building the new system 75

Conclusions 79

A defnition o care and support

Social care supports people o all ages with certain physical, cognitiveor agerelated conditions in carrying out personal care or domesticroutines. It helps people to sustain employment in paid or unpaid

work, education, learning, leisure and other social support systems.It supports people in building social relationships and participatingully in society.

Social care is part o a wider care and support system, which includes

social care, the NHS, the social security system, housing support andpublic health services. It also includes the services provided by thirdsector organisations, and the invaluable contribution made by carersand volunteers. The state pension and private nancial productsalso provide income that is used or care and support needs. TheCommission believes it is important to look at care and support inthe round rstly, because we know that people want to receive acoherent package o support that is shaped around them, not undingstreams and, secondly, because aligned and integrated services oerbetter value or money.

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The Report o the Commission on Funding o Care and Support

Summary o key fndings andrecommendations

Key fndingsThe current adult social care unding system in England is not t or

purpose and needs urgent and lasting reorm.

The current system is conusing, unair and unsustainable. People areunable to plan ahead to meet their uture care needs. Assessment processesare complex and opaque. Eligibility varies depending on where you liveand there is no portability i you move between local authorities. Provisiono inormation and advice is poor, and services oten ail to join up. Allthis means that in many cases people do not have good experiences.

A major problem is that people are unable to protect themselves againstvery high care costs. The current availability and choice o nancialproducts to support people in meeting care costs is very limited. Thereis great uncertainty and people are worried about the uture.

Most people are realistic about the need or individuals to make somecontribution to the costs o care in later lie, but they want a airer wayo sharing costs and responsibility between the state and individualsand they want to be relieved o ear and worry. There is consensus onthe need or reorm.

Our main recommendations

1. To protect people rom extreme care costs we recommend capping

the lietime contribution to adult social care costs that any individual

needs to make at between 25,000 and 50,000. We think that

35,000 is an appropriate and air gure and have used this example

throughout our report.Where an individuals care costs exceed

the cap, they would be eligible or ull support rom the state. This

change should bring greater peace o mind and reduce anxiety, orboth individuals and carers.

2. Not everyone will be able to aord to make their personalcontribution, and those currently just outside the eligibility ormeanstested help are not adequately protected. To address this,means-tested support should continue or those o lower means,

and the asset threshold or those in residential care beyond which no

means-tested help is given should increase rom 23,250 to 100,000.

3. People born with a care and support need or who develop one inearly lie cannot be expected to have planned in the same way asolder people. Those who enter adulthood already having a care and

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support need should immediately be eligible or ree state support

to meet their care needs, rather than being subjected to a means test.

4. Universal disability benets or people o all ages should continueas now.We recommend that the Government consider how better to

align benefts with the reormed social care unding system and thatAttendance Allowance should be re-branded to clariy its purpose.

5. People should contribute a standard amount to cover their generalliving costs, such as ood and accommodation, in residential care.

We believe a gure in the range o 7,000 to 10,000 a year isappropriate.

6. We recommend that eligibility criteria or service entitlement shouldbe set on a standardised national basis to improve consistency

and airness across England, and that there should be portabilityo assessments. In the short term, we think it is reasonable or aminimum eligibility threshold to be set nationally at substantialunder the current system.1 The Government should also urgentlydevelop a more objective eligibility and assessment ramework.

7. To encourage people to plan ahead or their later lie werecommend that the Government invest in an awareness campaign.

This should inorm people o the new system and the importance oplanning ahead. This campaign could be linked into the wider workto encourage pension savings.

8. The Government should develop a major new inormation andadvice strategy to help when care needs arise. It is critical thatthe public has access to better, easytounderstand and reliableinormation and advice about services and unding sources. Thisstrategy should be produced in partnership with charities, localgovernment and the nancial services sector. As proposed bythe Law Commission, a statutory duty should be placed on localauthorities to provide inormation, advice and assistance services intheir areas. These should be available to all people, irrespective ohow their care is unded or provided.

9. Carers should be supported by improved assessments which takeplace alongside the assessment o the person being cared or and

which aim to ensure that the impact on the carer is manageable and

sustainable. We support the proposals set out by the Law Commission

to give carers new legal rights to services and improve carersassessments. In implementing our recommendations on inormation

1 The Fair Access to Care Services (FACS) ramework was introduced in 2003. It wasreplaced byPrioritising Need in the Context o Putting People First: A whole system approachto eligibility or social care, published on 25 February 2010.

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and advice, the Government should ensure that carers have betterinormation and advice about support and available services.

10. In reorming the unding o social care, the Government shouldreview the scope or improving the integration o adult social

care with other services in the wider care and support system.In particular, we believe it is important that there is improvedintegration o health and social care in order to deliver betteroutcomes or individuals and value or money rom the state.

How do our proposals help individuals and amilies?

Under our core unding proposals, we are capping an individualslietime care costs and extending the upper threshold or means

tested state support rom 23,250 to 100,000. The chart below showshow making these two changes signicantly reduces the proportiono assets that people ace losing compared with the current system.

Under the current system someone who has lietime care costs o150,000 could lose up to 90% o their accumulated wealth. Thecombination o the capped cost model (with the cap set at 35,000)and the extended means test would ensure that no one going intoresidential care would have to spend more than 30% o their assetson their care costs.

Figure 1: Maximum possible asset depletion under our core

proposals or people who enter residential care and have lietimecare costs o 150,0002

Source: Commission analysis

2 This chart assumes residential care costs o 28,600 p.a. and individual income justsucient to cover a contribution to general living costs o 10,000 p.a.

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Our views on the level o unding or social care

We need to spend more on social care both now and in the uture.

This needs to come rom both individuals and the state.

We think the reorms we have set out will help people to manage their

contribution better, or example by helping people to plan and prepare,

and by encouraging the development o new fnancial products.

Individuals and amilies will need to consider how best to meet theircontribution. Many o the people we have spoken to, and who submittedevidence to the Commission, have said that it is not unreasonable thatpeople should plan and prepare to meet some care costs as they growolder. To support this, under our proposals, disability benets willcontinue as now, we recommend that there should be a more widelyavailable deerred payment scheme, and we anticipate that new nancialproducts would emerge.

Clearly, the state will need to continue to support the vast majority oyounger people with care and support needs.

The Government should both implement our reorms and ensure thatthere is sufcient, and sustainable, unding or local authorities. Local

authorities will need to be able to manage existing pressures as well asthe new requirements resulting rom our reorms.

The Government must devote greater resources to the adult social caresystem. As well as unding or new reorms, additional public unding orthe meanstested system is urgently required. The Commission recognisesthe Governments commitment to social care in the latest spendingreview settlement; however, the impact o the wider local governmentsettlement appears to have meant that the additional resources have notound their way to social care budgets in some areas. We suggest that theresources made available locally or adult social care each year should betransparent. Any periodic review o local government nancing should

have regard to the importance o the sustainability o unding or adultsocial care.

We estimate that our recommended changes to the unding systemwould cost rom around 1.3 billion or a cap o 50,000 to 2.2 billion

or a cap o 25,000.3

3 Public expenditure cost (in 2010/11 prices) were our recommended changes ullyimplemented in 2010/11.


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The Commissions task

The Commission has been asked to make recommendations onhow to achieve an aordable and sustainable unding system or

care and support or all adults in England, both in the home andin other settings. The Commission was asked to examine andprovide deliverable recommendations on:

how best to meet the costs o care and support as a partnershipbetween individuals and the state;

how people could choose to protect their assets, especially theirhomes, against the cost o care;

how, both now and in the uture, public unding or the care andsupport system can be best used to meet care and support needs;and

how its preerred option can be delivered.

Scope o the report

The proposals in this report cover all adults in England, botholder people and younger adults. Our proposals do not coverchildren, although there may be areas (such as a national eligibilityramework and improved inormation and advice) where theinteractions between the two systems will need to be considered bycentral and local government. The recommendations or reorm othe unding system or adult social care are or England only, butthe Commission has consulted with the devolved administrationsthroughout its work. We expect the Government will continue toengage with the devolved administrations as it takes reorm orward.


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Shortcomings o the present system

The Commission was asked by the Government to makerecommendations on the reorm o adult social care unding.4

We have gathered evidence and views on the current system and why itneeds to change. We reviewed the work o previous commissions andreports on social care unding, and looked at examples o dierentsystems rom across the world. What we heard and learnt presented anoverwhelming case or change.

The adult social care unding system conceived in 1948 is not t orpurpose in the 21st century and is in urgent need o reorm. Having tocope with a care and support need both emotionally and nancially

oten comes as a major shock. When people then experience the system,many perceive it to be unair. This is particularly the case when peoplehave to sell their homes, or use up the majority o any assets they have,to pay or care. The current system does not encourage or reward saving,and is poorly understood. People are not prepared, which oten leads topoor outcomes and considerable distress.

The current unding system

Today, the social care system in England provides care and supportthrough a meanstested system, which is delivered at the local levelby local authorities. Very broadly, under this system, people withassets over 23,250 receive no nancial state support and need tound their own care. The level and type o state support or people

with assets below this threshold depends on their needs and income.There are currently dierent rules or domiciliary and residentialcare. In residential care, someones housing assets (as long as thereis no dependant still living in the home) are taken into account inthe means test.

The Government currently spends 14.5 billion p.a. on adult socialcare in England. Just over hal o this is on services or older people.

4 The Coalition Government announced its intention to set up the Commission

on Funding o Care and Support in The Coalition: Our programme or government.The Commissions Terms o Reerence and how it approached its task are describedin the accompanying evidence pack.

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There are many people and organisations working hard to providevaluable support to individuals and amilies, and there are manyexamples o people providing exceptional care. We particularly recognisethe vital role carers play in the current system. Progress has also beenmade in the way that care is delivered and people now have more choice

and control, leading to greater independence and improved outcomesor individuals and amilies. However, there are major problems with the

way that social care is currently unded.

We have consulted widely throughout our work and believe there is nowconsensus that undamental reorm is urgently needed. There is a strongeeling that, without such reorm, the current system will deliver everpoorer outcomes or individuals and amilies. We agree.

We also know that it is not just the unding system that is broken. There

are wider problems that also need to be addressed. People have toldus that there needs to be better integration o services, the currentpostcode lottery o care should be addressed, there should be moretransparent assessment processes, and there needs to much betterinormation and advice. We discuss these issues later in the report.

Issues with the current system

People are exposed to potentially very high care costs

Around one in 10 people, at age 65, ace uture lietime care costs o

more than 100,000.5

Younger adults with care needs ace signicantlyhigher lietime costs. As a result, in paying or care, some people canlose the majority o their income and assets. In particular, those enteringresidential care are oten orced to sell their homes this is widelyregarded by the public as unair.6

5 All care costs exclude a contribution towards general living costs or people inresidential care, which is assumed to be around 10,000 p.a. Data on the costs osocial care is poor, especially or those receiving domiciliary care. The source othis analysis is modelling work carried out or the Commission as part o the coreprogramme o the policy research unit in economics o health and social caresystems also reerred to as ESHCRU (at the University o York, London School oEconomics and Political Science (LSE) and University o Kent) and builds on themicrosimulation and aggregate models originally developed by the Personal SocialServices Research Unit (PSSRU, at the University o Kent and LSE). The work wasunded by the Department o Health.

6 Commission on Funding o Care and Support, Call or Evidence; Public engagementexploring care and support funding options, TNS-BMRB on behal o the Commission onFunding o Care and Support, 2011.

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The cost o care

We estimate that a quarter o people aged 65 will need to spend verylittle on care over the rest o their lives. Hal can expect care costs o

up to 20,000, but one in 10 can expect costs o over 100,000. Somecould spend hundreds o thousands o pounds. There is no way opredicting in advance what the costs might be or any one person.

Figure 2: Expected uture lietime cost o care or people aged 65 in2009/10, by percentile (2009/10 prices)

Source: ESHCRU/PSSRU microsimulation model

We know that or those who are born with a disability, or whodevelop a care and support need during their working lie, lietimecosts will be considerably higher.

Currently, individuals cannot protect themselves against the risk o

very high care costs by pooling their risk. In areas such as motoringand housing, people buy private insurance to pool their risk and coverthemselves against exposure to high costs. For health care, the NHSpools risks by providing social insurance to everyone; or care costs,however, the state does not provide universal support and people areunable to take out private protection. This is the only major area in

which everyone aces signicant nancial risk, but no one is able toprotect themselves against it.

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There is inadequate unding people are not receiving the care and

support they need

We consider that the current social care system is inadequately unded.People are not receiving the care and support that they need and thequality o services is likely to suer as a result. We recognise that thereis a shortage o precise data on the extent to which needs are currentlymet, but we do know that social care expenditure on older people hasnot kept pace with the increase in demand. Over the last our yearsdemand has outstripped expenditure by around 9%.7

Figure 3 shows real expenditure on personal social services care since2005/06 against projected demand. Projected demand takes account oboth real unit cost growth o services (using the Personal Social Servicespay and prices index) and demographic change.

Figure 3: Expenditure and demand: older peoples social care

(2009/10 prices)

Source: Personal Social Services Expenditure and Unit Costs: England 2009-10 Final

Council Data, The Inormation Centre, Department o Health

We know that the unding o social care or older people has not keptpace with that o the NHS. In the 15 years rom 1994/95 to 2009/10,real spending on adult social care increased by around 70% or olderpeople while, over the same period, real spending in the NHS has risenby almost 110%.8 In the uture this is going to need to change.

7 Commission analysis oPersonal Social Services Expenditure and Unit Costs: England2009-10 Final Council Data, The Inormation Centre, Department o Health.

8 It should be noted that, over this period, there have been signicant transers oresponsibility between social security, the NHS and social care; pay and prices in social

care have risen more quickly than general infation; and there have been rising levelso demand as the number o older people and younger adults with a care needhas risen.

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Taken together, these pressures are likely to mean increasing demandshave been placed on the care and support system, and the quality o caremay have been adversely aected.

The current system delivers inconsistent services

There is unacceptable variation in eligibility or services across the country

There are currently 152 dierent adult social care systems one or eachlocal authority in England. Entitlement to services diers across thecountry and people complain o a postcode lottery o care.9 Dierentpeople, with similar care needs, can receive very dierent levels osupport rom their local authorities. Each local authority carries out anancial assessment o what the person can aord to pay. For residentialcare there are national regulations on charging, but or domiciliary carelocal authorities can design their own charging policies within the overallnational guidance this leads to variation.

As we gathered our evidence, we concluded that the current approachto setting eligibility and assessing care FACS10 lacks transparency,consistency and clarity. Although it takes into account a wide variety oactors, it does not seem objective. In particular, people are not able to

work out or themselves whether or not they are likely to be eligible orlocal authority support and whether they have been dealt with airly.

Assessments are not portable

Many people have told us that they are very rustrated by the act thati they move to a new local authority, they lose their care until they arereassessed by that new local authority. It is not acceptable that peoplecurrently eel trapped and unable to move should they want to. This doesnot enable people to have choice and control over their own care.

The system is complex and difcult to understand

People are not planning or the uture

Currently, many people are unaware o how the system operates. Manybelieve they will receive ree care in later lie and are oten shocked

when they discover the scale o their nancial liabilities at the point thatthey, or a amily member, need care. Even i people are aware o how thecurrent system works, there is little they can do to prepare or the uture.

9 Summary o the Big Care Debate consultation, Department o Health, 2010 and PublicOpinion Research on Social Care Funding: A literature review on behal o the Commission onthe Funding o Care and Support, Ipsos MORI Social Research Institute, 2011.

10 The FACS ramework was introduced in 2003 to address inconsistencies across thecountry about who gets support. It was replaced byPrioritising Need in the Context ofPutting People First: A whole system approach to eligibility for social care, Department o Health,

2010 but the ramework is still widely reerred to as FACS. The revised guidance placeseligibility criteria within a wider context o personalisation and prevention to addressnot only the needs o individuals but also those o the wider community.

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The state does not oer protection beyond the meanstested system andthere are no nancial products on the market to help people prepare inadvance or uture costs o care. The result is that many people do notplan or meeting uture care needs.

The provision o inormation and advice is poorOnce people, o any age, enter the system, there is very limitedinormation and advice available, and it is oten o poor quality. Peoplecan be unaware o the support and services that are available to them.There is conusion about the role o benets, the NHS and social care.People oten struggle to nd nancial inormation and advice. Thereis also little inormation and advice specically or carers. There areexamples o good practice but, on the whole, our evidence stronglysuggests people are bewildered by the system and do not know whereto go or who to talk to or advice.11

The wider care and support system is not properly joined up

There are signicant overlaps between the dierent public undingstreams or care and support. People can receive support rom the statethrough the social care system, disability benets and the NHS. Some

will be receiving housing benet. Older people will receive the statepension, and younger people may be claiming other workrelatedbenets. People and amilies oten ace multiple assessments and poorlycoordinated services, and the state does not achieve best value or themoney it spends.

There have been attempts across the country to integrate services andthere are some examples where this has worked well. However, theseexamples are not widespread and many people still experience disjointedservice delivery and limited choice. For example, we know that manypeople who wish to die at home are admitted to hospital and end theirlie there.12

11 See Public Opinion Research on Social Care Funding: A literature review on behal o theCommission on the Funding o Care and Support, Ipsos MORI Social Research Institute,2011.

12 A Demos/YouGov poll in 2010 ound that only 7% o people said they wanted to diein hospital, yet about 58% o deaths take place in hospital. More detail can be oundin the reportDying or Change, Demos, 2010.

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Pressures on the system

The current system is neither t or purpose today, nor or coping withuture pressures.

People are living longer

People can now expect to live much longer ater they retire, comparedwith their parents or grandparents. This is something to celebrate.In 1901, there were just over 60,000 people aged 85 and over in the UK.Today there are 1.5 million a 25old increase. Many younger people

with a care and support need are also living longer.

There has been signicant demographic change over the past century.As a society, we have managed this change and continued to prosper.

However, the current system or supporting people is not working as wellas it should, and now needs reassessing i it is to be t or the uture.

As Figure 4 shows, we can expect urther rapid demographic change,with particularly striking increases in the number o the oldest peoplein our population.

Figure 4: Growth in the number o older people in England 20102030,

by age

Source: 2008-based population projections, Ofce or National Statistics

Figures rom the Oce or Budget Responsibility show that UK publicspending on longterm care (on the current, unreormed system) isexpected to increase rom 1.2% (2009/10) to 1.7% (2029/30) as a

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percentage o total gross domestic product (GDP). This is growth o 40% aster than any other area o agerelated public spending and is largelydriven by demographic change.

As part o living longer, people can expect to need some care and

support at some point in their lives. For some, this will be very limitedand may come close to the end o their lives when they become very railor unwell; others will need much more extensive support or ar longerperiods. Many younger people with a care and support need are alsoliving longer, oten now outliving their parents.

These trends imply that as a country we will need to provide much morecare and support. This will need to come partly rom increased publicspending, partly rom private contributions, and partly rom unpaidcare. The reorms we propose will support people in planning and

making their contribution. They should also better support the valuablecontribution made by carers.

People are better o and their expectations are rising

Not everyone will own their own home or have signicant savings, andit is important that there is additional support or these individuals andamilies. However, in addition to living longer, people are generallybecoming wealthier and expectations o the quality o care that people

want are rising. A reormed unding system will help people better meet

these expectations.

Given that the uture is uncertain, we believe any reormed undingsystem or care and support will need to: be resilient to change; fexand adapt to changing pressures and demands; and meet the needs odierent populations and groups. Because the adult social care undingsystem has been neglected or too long, it can seem arbitrary and unairto the people who need it the most. It is now urgently in need o reorm.In the next chapter we outline our proposals or how we think thisshould be done.

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Fairer unding

Our overall objective or reorm is to: enhance the wellbeing oindividuals, amilies and carers; support people o all ages in achieving

the outcomes they want rom their lives; and treat them with dignityand respect.

To achieve this overarching aim, the Commission believes that anyreormed unding system should:

oer protection to everyone against the risk o high care costs and beclearer, helping people to plan and prepare, and encouraging saving;

support everyone in making their personal contribution by opening upa viable space or nancial products, supporting carers and providingtargeted state support; and

be better aligned with other elements o the care and support systemto orm a more streamlined and integrated system in which delivery isshaped around individuals, not services.

We believe that a capped cost model is the best way o achieving these aims.

Capping the cost benefts everyone

We think the best way to reorm the adult social care unding systemis or the state to step in and take responsibility or the area ogreatest unpredictable risk. This approach means that individuals

would need to take responsibility or their own costs up to a certainpoint but, ater this, the state would pay. We see our proposals as atype o social insurance policy, with a signicant excess that people

will need to cover themselves.

A minority o people would reach the level at which the state stepsin these would be those with the highest care needs over thecourse o their lietime. However, everyone would benet romknowing that, i they ended up having to ace these costs, they wouldbe covered. We believe that by removing the ear and uncertaintyinherent in the current system, people would be encouraged tomake sensible preparations or the uture. The approach wouldcreate a new space or nancial products, which could supportpeople in making their individual contributions.

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A new model o shared responsibility

Our recommended system redenes the contract between individualsand the state and has the ollowing main elements that come together toorm a clear, national oer:

The contribution individuals are expected to make in meeting the costo care will be capped. To start with, people would be expected to meettheir own needs as best they can. Once their accumulated needs havereached the level o the cap, they would be eligible or a care packageunded by state.

Those who cannot aord ully to make their contribution wouldcontinue to receive means-tested support, which will be extended.

We recommend that the upper threshold within the residential care

means test should be raised rom 23,250 to 100,000.

Everyone would be entitled to universal disability benefts (which willalso support people in addressing lower care and support needs).

Those in residential care would be expected to make a contribution totheir general living costs, just as they would be expected to meet thecosts o living in their home.

Figure 5: Our proposed unding system

Individuals are initially

responsible or meeting

their own care costs,

up to the level o the cap

Extended means-tested

support helps those who

cannot aord the ull cost

o care

Once someone has

accumulated care costs

up to the cap, the state

meets all remaining

care costs

Universal benefts help people pay or care

and meet other disability-related costs

How will the system work?

Care or older people

The individuals contribution

To start with, individuals are responsible or meeting the costs o theirown care. Targeted support, through a meanstested system, will remainin place to support those with less money to make their contribution.


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In order to maximise choice and control, we want people to havedierent options or meeting their contribution. Some people maychoose to pay or all their care through their income or savings.Others may decide to release some o their housing assets or take outa specic nancial product. It would be down to individuals and their

amilies to make personal decisions about how they want to meet theirpersonal responsibilities.

The states contribution

At the core o our proposal is the new capped cost element, which sets alimit on the amount individuals are expected to contribute towards theircare over their lietime. Ater individuals have spent a certain amount,they would become eligible or stateunded care.

We have considered careully the level at which the cap should be set and

have concluded that it should be between 25,000 and 50,000. We believethat a cap outside o this range would not meet our criteria o airness orsustainability. Given this, we believe a cap o 35,000 is air and realistic,and have used this as the gure or the cap throughout our report.

We discuss the rationale or the level o the cap later in the report.

The capped cost scheme would work as ollows:

Everyone with a care and support need can ask to be assessed by theirlocal authority.

I they are assessed by the local authority as having some care needsabove a dened, nationally set threshold, the local authority will workout how much it would cost to meet these needs. This would be basedon the cost o a typical local authority package or that level o care,in that local area. I the individuals income and assets are low enough,meanstested support would be given.

For those not entitled to meanstested support, the local authoritywould use this assessed care package to determine at what point intime the individual would meet the cap. Ater this point, the individual

would be eligible or ree care rom the state.

I someones needs change, they can be reassessed and the time takento reach eligibility or ree support adjusted accordingly.

The stateunded care element will be based on a local authority carepackage, but people will be ree to top up rom their own resources,should they wish. I someone moved to a dierent local authority, they

would take with them a record o their contributions to date.

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Alice

An example o aperson needingresidential care or

longer than average.

Alice lived alone in her own home worth

180,000. She had dementia and needed to go

into a residential care home when she was 83 or

the last ve years o her lie.

Under the current system

Under the current system, her daughter needed to arrange or herhome to be sold in order to be able to use the money to pay or hercare. She had to pay or all her care and living costs in ull until shedied, spending 165,000 rom her pension income and housing wealth.

Under our reormed system

Under our reormed system, Alice would initially need to contribute

in ull to her care and general living costs. Ater two years, she wouldhave contributed 35,000 towards her care and reached the cap.From then on, the state would pay her care costs o 18,500 p.a., andshe would pay just or her general living costs out o her pensionincome. She would be able to keep 80% o her wealth.

Care or people o working age

Many people can expect to develop some sort o care and support needin their later lives, and we think it is reasonable to expect someone to

prepare or this eventuality. The same cannot be said or younger people or those either born with a disability or who develop one early in lie.

At present, the vast majority o people o working age with a care andsupport need are supported through the meanstested system and receivestateunded care. This would continue under our proposals, as it is notreasonable to expect people to have saved or this need. Many will havelow incomes and will not have had the opportunity to accumulate assets.However, those people o working age who do have private income orassets, or example rom employment or an inheritance, are currently

required to pay the ull cost o their care.

We are keen to have one overarching system, underpinned by the sameprinciples, as this avoids arbitrary boundaries. Two systems one or

younger people and one or older people (those over the state pensionage) could lead to unair outcomes. For example, i there were twosystems in operation, a 64yearold and a 65yearold with similar levels oneed and the same nancial position could have to make very dierentlevels o nancial contribution and have very dierent outcomes. We donot think this is sensible or equitable.


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This is why we believe that those who develop a care and support need

during their working lie should be assessed in broadly the same way as an

older person. However, in setting the cap, we think it should be tiered in a

way that refects dierentials in the likely ability to accumulate assets.

A tiered approach could work as ollows:

Those reaching adulthood with eligible care needs, many o whom willhave been born with a disability, should receive stateunded care theyhave, in eect, met the cap.

Anyone developing an eligible need up to the age o 40 should alsoace a zero cap, as we do not think that people younger than 40 can, ingeneral, realistically be expected to have planned or having a care andsupport need, nor will they have accumulated signicant assets. People

may still be paying o debts, have signicant amounts still to pay ontheir mortgage, and could have young amilies.

Ater the age o 40, the cap should then increase up to retirement age,when the ull cap o 35,000 will apply. We expect that this could rise at10,000 per decade so a 40yearold could be expected to have a capo 10,000; a 50yearold, 20,000; a 60yearold, 30,000; and a 65year old, 35,000.

Those within the current meanstested system will continue to receive

state support and more people will become eligible or state support.

We also believe that there is considerable scope to simpliy andstreamline support, especially at the key transition rom childhood toadulthood. We understand that this is a time o uncertainty and anxiety ormany individuals and amilies. We believe that a guarantee that the state

would continue to und care in ull would be reassuring to many amilies.

We have suggested 40 years o age as the point at which the cap starts toincrease rom zero, as we think by this point many people will haveaccumulated some wealth. It will be or the Government to make a

judgement on exactly how it wishes to implement such a tiered system.

We also know that there may be some people who need care at dierenttimes in their lives, or shorter periods. We think that all episodes ocare should count towards the cap, regardless o when they occur and

whether they relate to the same underlying condition. Such an approachis simple and consistent with our principle o protecting people againsthigh lietime care costs.

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We expect that, in the uture, the nancial services sector could developproducts that would oer protection or people against care costs duringtheir working lie, as well as in later lie. For example, critical illnesspolicies could pay out lump sums to cover the costs an individual acesshould they develop a care and support need at a given point in their lie.

Emma

An example o aperson turning 18

with an eligible need.

Emma was born with a learning disability.

Her mother died when she was 35; she then had

to move into supported housing. She inherited

150,000 rom the sale o her mothers house.

She died aged 52.


Under the current system, Emma received all her care and support

ree o charge up until the point at which she inherited 150,000.From then on, Emma had to use these assets, along with disability

benets, to pay or her supported housing and care and support costs.

By her mid-40s, she had spent down her assets to 14,250, the means-

tested threshold, and received support rom the state, without charge.


Under our reorms, as Emma would have turned 18 with an eligible

care need, she would be deemed to have met the cap and would receive

all her care without charge or the whole o her lietime. She would

have contributed to her general living costs partly hersel and partlythrough her disability benets. She would spend hal o the 150,000on her general living costs, but could use the rest o the moneythroughout the rest o her lie to improve her overall wellbeing.

Contributing to general living costs

Under the current system it is very dicult to disentangle the generalliving costs rom the cost o care in a residential care setting. There is alack o clarity about how much a care home placement costs overall and how this cost is divided up between care and general living costs.

Under our proposals, people in residential care will be responsible or

making some contribution towards their general living costs, such as ood

and accommodation just as they would be expected to cover these costsi they were living at home but a limit will be set on this contribution.

It would seem unair that those receiving domiciliary care would nolonger need to make any contribution towards their living costs i theymoved to a dierent care setting. We want to ensure a level playing eldbetween dierent care settings. However, we believe this contribution

should be clear, and there should be a limit on the overall contribution.

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We think that the contribution should be a xed amount across thecountry. We believe that this is a air and simple approach. Setting a limiton the amount that people have to contribute towards general livingcosts means it will not be possible to charge more or care and claim itis or general living expenses. This will add greater transparency to the

system. This xed contribution should be based on a judgement o whatindividuals could aord and what they might expect to pay or daytodayliving costs.

We have looked at a range o dierent fgures or older people, ranging

rom 7,000 to 10,000 p.a. For the purposes o our analysis we haveused 10,000 p.a. This is a contribution o around 190 per week. This isthe maximum contribution we think any individual should have to make.

We discuss this urther in Chapter 3, which outlines our rationale or ourproposed reorms.

To meet this contribution, older people would need to make acontribution rom their income, savings or assets, in addition to theirstate pension. It is likely that those unable to aord to make thiscontribution will already be eligible or stateunded care under themeanstested system.

On average, people o working age with a care and support need havelower incomes than older people because the social security systemtypically provides a lower income to those below state pension age.

As a result there is a larger potential gap between their income andany contribution. The Government will need to take this into account

when deciding on how much any contribution should be, and whetheror not dierent levels are needed or people o dierent ages.

Personal Expenses Allowance

As in the current system, no one will be expected to contribute theirentire income to their residential care costs; everyone will be let with acertain amount o money or personal expenses each week. Under thecurrent system, this amount is 22.60 a week (the Personal Expenses

Allowance (PEA)). We think that the PEA should continue, but wouldencourage the Government to consider the case or increasing it inthe uture.

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John

An example o asingle older man whoenters residential care

towards the end ohis lie.

John had a stroke at the age o 85. He could no

longer manage at home and entered a care home

costing 28,500 a year. He lived in the care home

or our years beore he died. Prior to this, he lived

on his own, in a house which he owned outrightand was worth 140,000. He had 220 a week

income rom his own pension and the state pension.


Under the current system, John had to contribute all his incomeexcept or 22.60 a week and use his housing assets to pay or hiscare. He continued to pay or his care in ull until he died, spending74,000 rom the value o his house.

Under our reormed systemUnder our reorms, John would pay the rst 35,000 o his care costsand ater two years he would reach the cap and then receive all hiscare without charge. He would continue to contribute 10,000 a yeartowards his general living costs but would do this all through hispension income.

He could choose to use his housing assets to pay or the 35,000(taking out a deerred payment rom the local authority), and stillhave 105,000 let, threequarters o his wealth.

Reorming the means-tested system

The Commission believes that a means-tested system must continue

alongside the new capped cost element. Meanstested support will needto be available or those who may not be able to aord to make their ullpersonal contribution.

The current meanstested system is complex; it does not encouragesaving or the uture and many perceive it as unair. Dierent local

authorities have dierent charging policies or domiciliary care and canchoose to support people at dierent levels o need. In the uture, wewant a meanstested system that encourages people to plan and save orthe uture. Ideally, the system should also support people in achievingthe outcomes they want with them making choices about their carebased on what is right or them.

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When responding to our Call or Evidence and in our deliberativeresearch, many people told us that they were particularly concernedabout how the means test works or those in residential care. The 23,250upper asset threshold or state support in residential care was seen tobe particularly unair. We agree that the level at which the threshold is

currently set is not air or sensible.We thereore recommend that theupper threshold within the residential care means test should be raised

rom 23,250 to 100,000. This will mean that more people are eligibleor state support and will oer greater protection to homeowners,in particular those o more modest means whose savings have beenaccumulated in their home.

Aisha

An example o how

the reormed meanstest would work.

Aisha had arthritis and mobility diculties,

which meant that she required a domiciliary care

package o 100 per week ater her husband diedwhen she was 78. This was part unded by the

state as she had a weekly income o 215 and

savings o 3,000. Her condition worsened and

at the age o 80 she moved into a residential care

home or the nal three years o her lie.


On moving into the home, Aisha had to use up her savings and sellher house worth 75,000 to und her care. She paid the ull 28,500 p.a.

using the money rom her house, her pension income and disabilitybenets. Some 22,000 out o her 78,000 o wealth was let.


Aishas domiciliary care package unded by her local authority would have meant that 10,000 had already been contributed towardsthe cap by the time she moved into the care home. At that point,her housing assets would be taken into account in the means test,but with her house value alling below the upper asset threshold o100,000, she would receive a contribution rom the state o around

6,500 p.a. and so pay a reduced rate o around 12,000 p.a. romher assets, along with a contribution o 10,000 rom her income orgeneral living costs. She would reach the cap ater a year and a halin residential care, and or the remaining year and a hal would onlycontribute towards her general living costs. She would be able to keep62,000 o her assets.

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Capping risks

Protecting people rom high care costs benefts everyone

Everybody currently aces a high degree o uncertainty over the uture

costs o social care. At present, neither the state nor the private sectoroers people the chance to protect themselves against these potentially

very high costs. People are aced with a very signicant risk that they cando little to avoid or mitigate.

Given this, our recommended approach is that individuals shouldtake responsibility or their own costs up to a certain point but, aterthis point, the state should pay. We see our proposals as a type osocial insurance policy, with an excess that people will need to coverthemselves. We are proposing that risks are pooled, so that the cost oan individual with very high care needs is shared across the population.

During the course o our work, we looked at a range o dierentapproaches to pooling risks so that people have protection againsthigh care costs.

Firstly, we looked to see whether this was something that could be letto the private sector as with areas such as house and car insurance.The problem is that there is currently too much uncertainty involvedor the private sector to take on the ull risk. There is uncertainty overhow long people will live, uncertainty over changing care and supportneeds, uncertainty over costs, and uncertainty over wider changes thatcould aect care (such as medical advances or changes to the economy).These uncertainties have meant that the sector has struggled to designaordable and attractive products that people want to buy. No countryin the world relies solely on private insurance or unding the wholecost o social care.

We also examined the case or a ull social insurance scheme. This would

provide everyone with ull protection rom care costs. However, it wouldrequire a much larger increase in public expenditure than our proposals,and would leave little scope or uture fexibility in costs. Evidencesuggests that those countries that have introduced ull social insuranceschemes have cut back on care packages and eligibility in response toscal pressures. The consequence o this is that unmet need is rising andpeople are still let exposed to very high care costs. We are very keen thatany new scheme should be resilient to changes in the economic, politicalor social environment.

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The benefts o risk pooling13

The worked example below illustrates the benet o risk pooling to the individual.

Assume that 25% o people over 65 years o age need intensive careand support, costing 30,000 a year, or an average o two years. Also,assume that the maximum duration o needing this care is 20 years.

In principle, there are two ways in which a person could seek tonance such costs by selinsuring or by buying insurance:

In a world o no insurance (i.e. no risk pooling), a person whoseeks total protection must save enough to cover the costs o themaximum potential duration o longterm care. Working on gureso 30,000 p.a. or 20 years, this would equate to 600,000.

I they bought insurance (i.e. risks are pooled) at a air price theywould need to save enough to cover the average duration o care.

This would be two years, at 30,000 p.a. with a probability o 25%.In total, this would mean spending 15,000 (excludingadministration costs).

With risk pooling in place, people who wanted to protect themselveswould not have to save 600,000; instead they would pay an insurancepremium o 15,000.

Given this, we decided that a shared responsibility model was bestbecause risks are shared between the state and the individual. Thereare several dierent approaches to sharing the risk, but we believe thatcapping overall costs oers the best way o providing protection against

very high costs the costs that people really worry about.

The benefts o capping the cost

By capping the costs that individuals ace, we are introducing partial riskpooling or high care costs. The reorms target resources on those withthe highest needs, but give greater peace o mind to everyone.

13 Example adapted rom Long term care: a suitable case or social insurance, Barr N,Social Policy and Administration, 2010; 44(4): 359374.


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Figure 6: Lietime care costs met by the individual and the state under a

35,000 cap, or people entering care, by percentile14

Source: ESHCRU/PSSRU microsimulation model

A minority o people would ace costs above the level at which the statesteps in. We believe that setting the cap at around 35,000 would meanaround a third o all people entering care (or a quarter o those aged 65now) would reach the cap. These people would be those with the highest

care needs over the course o their lietime.

Everyone would benet rom knowing that i they ended up in theposition o acing these costs, they would be covered. We would removethe ear and uncertainty o the current system, which should encouragepeople to make sensible preparations and to save. There would also benew space or nancial products, which could support people in makingtheir individual contribution.

Figure 6 shows the distribution o costs o care or those entering care in

2009/10 and the costs that would be borne by the state and individualsunder our proposals. The prole o this risk with most people acingmanageable costs, but an unlucky ew acing high costs is similar toother risks against which we usually insure.

14 This chart looks only at people who enter care, ignoring the quarter o 65yearoldswho can expect to need little or no ormal care. The eect o the means test is not

shown in practice many people would receive additional help in making theircontribution. Costs are adjusted or care cost infation and presented in 2009/10care prices, to refect the eect o a cap that rises in line with care costs.

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The level o the cap

We believe that the cap should be set at between 25,000 and 50,000.We have used a gure o 35,000 throughout this report to illustrate theimpact o the cap, as we think this is a realistic contribution or manyolder people. To put this in context, the median property and savings

wealth o single women aged 7584 is 124,000, with a quarter o thisgroup having assets o less than 5,000.15

It is possible that the cap could be set at a dierent level either a littlehigher or lower. However, we do not think it should be set in excess o50,000 or below 25,000. Anything above 50,000 could mean people

with lower incomes and lower wealth would not receive adequateprotection; anything below 25,000 would suer the same drawbacksas ull social insurance, jeopardising our principles o sustainability andresilience. In our view, moving outside the range o 25,000 to 50,000could mean that the overall reorms would ail to satisy our criteria onairness and sustainability.

Figure 7: The cap compared with typical levels o wealth and income or

single women aged 7584 in England

Sources: Wealth and Assets Survey; DWP Pensioners Incomes Series

Earlier in the report, we outlined our proposal that the cap be tiered oryounger people, to take into account dierentials in the likely ability toaccumulate assets. We have proposed that all those who reach adulthood

with an eligible care and support need or who develop one beore adened age should have their cap set at zero. We have suggested that thisage is 40, ater which the cap would increase in incremental steps up toretirement age.

15 Wealth and Assets Survey 200608, ONS.
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The level o the cap is discussed urther in the evidence and analysissupplement to our report.

General living cost contribution

People living at home have to pay general living costs such as ood,heating and accommodation. Ater reaching the cap on care costs, wethink it is right that people continue to do this. I they are receiving care

while living at home this happens automatically. I they need to move toa residential care acility, we think the general living costs contributionshould be at a level that is both aordable and representative o generalliving costs.

The Guarantee Credit guarantees a minimum income o 7,142 orthose over state retirement age. The median net income o single peopleaged over 65 is 11,284,16 which, ater subtracting the Personal Expenses

Allowance (PEA),17 means that around hal o older people should beable to aord a contribution o 10,000 out o their incomes. Giventhis, we have suggested a contribution towards general living costs in therange between 7,000 and 10,000 p.a.

Setting the level o the contribution will be a decision or theGovernment. In doing so, it will need to balance this contributionagainst the overall level o the cap. The Government will also need toconsider the level o the contribution o people o dierent ages andthe appropriate level o contribution or those o working age who arelikely to have lower incomes.

Raising the threshold or state support in residential care

Meanstested support must continue or those who need care andcannot aord to contribute up to the cap. To support people eectively,however, the current meanstested system needs to be improved. It hasgrown up piecemeal over time and there are many inconsistencies.

The current residential care meanstested system does not give any

support to those with assets over 23,250 including housing assets.For people with assets below 23,250, the means test makes a judgementabout how much they can aord to pay. Anyone with assets below14,250 is only asked to contribute rom their income. Those withassets between 14,250 and 23,250 are assumed to be able to make acontribution rom their assets o 1 per week or every 250 o assets that

16 Source: Pensioners Incomes Series 2009/10, Department or Work and Pensions.

17 The amount that, in assessing a residents ability to pay or his or her care homeplace, the local authority is required to ensure is retained or personal expenses;this is currently set at 1,175 p.a.

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they have above the 14,250 minimum (known as tari income). I apersons care costs are greater than the amount they can aord, the statepays the dierence.

The withdrawal o all support at 23,250 means that the means test

oers virtually no protection to homeowners who need residential care.Median housing wealth among single people over 65 who own propertyis around 160,000, so most homeowners would have to spend nearly allo their housing assets beore qualiying or support. We are thereorerecommending that the threshold should be increased to 100,000,

with tari income calculated on assets between 14,250 and 100,000 sothat more people receive some state support. This would mean there isgreater protection or homeowners than at present.

Interaction between the cap and the means-test threshold

The capped cost model sets the maximum contribution that anyone willneed to make towards their care costs over their lietime. For those whoare less able to aord this contribution, the means test ensures that thestate helps them so they will not have to pay the ull amount.

However, meanstested support is currently withdrawn sharply isomeone exceeds the asset threshold o 23,250. I a cap o 35,000

were applied together with the current means test, this would mean thatalmost all homeowners would pay the ull costs o residential care until

they reached the cap. As shown in Figure 8, or those with the lowestlevel o housing wealth this could mean spending up to almost 60% otheir assets. This is a signicant improvement compared with the currentsystem, in which people can lose almost 90% o their assets in paying orcare. However, the impact is still elt disproportionately by those in thelowest wealth quartile.

The combination o the capped cost model and the extended meanstest would ensure that no one going into residential care would have tospend more than 30% o their assets on their care costs.

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Figure 8: Maximum possible asset depletion or people who enter

residential care and have lietime care costs o 150,00018

Source: Commission analysis, Wealth and Assets Survey

18 This chart assumes residential care costs o 28,600 p.a. and individual income justsucient to cover a contribution to general living costs o 10,000 p.a. Housing

wealth percentiles relate to homeowners only.

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Supporting people in meetingtheir contribution

Universal disability beneftsUnder our reorms, universal disability benets or both older peopleand workingage adults will continue.We are not proposing any reormsthat would result in anyone losing their disability benefts. We understandthat people appreciate cash benets as this enables choice and control,and supports them in living independent lives.

For older people, there will continue to be a universal disability benetto support those with care and support needs. This should supportpeople aced with additional costs, encourage early intervention andhelp people who rely on unpaid care to meet their care needs.

The benet will look like the current Attendance Allowance (AA), but toacilitate the move towards a clearer, national oer, we recommend that:

The Government should clariy the role o AA by rebranding thebenet. People do not understand the term Attendance Allowanceor the purpose o the benet. We know that many people who areeligible or AA are not currently claiming it. Research conducted bythe Institute or Fiscal Studies suggests the name o a benet can have areal eect on how it is spent.19

People who reach the cap and start to receive ree stateundedresidential care should not receive AA in addition to the care packageas this would mean the state paying twice or the same need. This

would also mean that those benetting rom the cap are treated in thesame way as those receiving meanstested support.

The Government should consider how to align the assessmentor disability benets with the adult social care system. We discusselsewhere in this report the need or a more objective, nationalassessment scale or social care. There is the potential or this newscale to complement the disability benets assessment so that peopleexperience a more aligned, simple and streamlined process.20

19 Cash by any other name? Evidence on labelling rom the Winter Fuel Allowance, Beatty TKM,Blow L, Crossley TF and ODea C, Institute or Fiscal Studies working paper 10/11,2011.

20 Further work and consultation would be necessary with devolved administrationsbecause universal disability benets are reserved matters, whereas social careunding is a devolved matter.

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For younger adults, the Government has already announced a reormo Disability Living Allowance (DLA) and the introduction o thePersonal Independence Payment (PIP). Eligibility or PIP is based onan independent assessment including a acetoace consultation. Giventhese changes, the Commission is not proposing any urther changes to

workingage disability benets, but the Government will need to considerthe interaction o PIP with the new social care unding system and

whether urther changes are required.

Financial services products

At the moment, no major nancial services providers oer preundedinsurance against social care costs. This means people are not able toprotect themselves in advance o having a care need. There are somespecic products that can help people, and are taken out, when theyalready have a care need, such as equity release and immediateneedsannuities.21

There are complex reasons or the lack o preunded insurance policies.Partly it is because it is very dicult to price an insurance contract thetime periods are long and the risks are very uncertain. Partly it is becausepeople do not currently want to buy the products. The reasons or thislack o demand include: a lack o understanding about the currentsystem; a belie that care is ree, like the NHS; a reluctance to addresssomething unpleasant to think about; and, or some, a preerence or

taking a risk, rather than trying to save or a cost that they are unable topredict and that could be potentially very high.

We have had extensive discussions with the nancial services sectorand think that our proposals would stimulate both supply and demand.By capping the overall risk that people ace, new nancial products coulddevelop to support people in making their contribution. These productscould be linked to pensions, savings, insurance and housing. Our view isthat given the taxavoured treatment o pensions, ISAs, and housing, theseare most likely to be the vehicles used to prepare or social care costs.

21 Immediateneeds annuities are purchased as a lump sum when someone needs care.

They then pay out regular monthly benets ree o tax i paid to a care provider(registered with the Care Quality Commission) or taxed as a purchased lie annuityi paid directly to the care recipient.
http:///reader/full/annuities.21http:///reader/full/annuities.21http:///reader/full/annuities.21


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What types o fnancial products may emerge?

A variety o dierent products may emerge, taking into accountthe needs o dierent segments o the market, supporting those o

dierent ages and income levels. The industry has indicated thatpossible products include:

Products linked to pensions disability linked annuities could becomean attractive product in the uture. A disability linked annuity worksby reducing the income rom an otherwise fat annuity (say byaround 10%) but then doubling or trebling income at the point odeveloping a care need (e.g. ailing three activities o daily living)or reaching a certain age (e.g. 85). Clariying the tax treatmento disability linked annuities could urther encourage activity in

this space and we recommend that the Government make a clearstatement that disability linked annuites are permissible under

current pension taxation rules.

Products linked to housing assets we think many people may decideto use a part o their housing wealth to meet their contribution. Torelease housing equity, some people may decide to downsize, othersto take out an interestonly loan secured on their house. Equityrelease may be attractive or some people and the industry maydevelop new mortgagebased solutions specically to meet this need

in the uture.

Products linked to insurance the industry has said that there maybe opportunities to convert critical illness cover or lie insurancepolicies to oer cover or care costs. A urther insurance area thatcould potentially grow is topup insurance, which could provide anextra amount o money to supplement the amount people spend onaccommodation and general living.

In order to support the development o the market,we recommend thatthe Government should set up a working group o central government,local government, the nancial services industry, the Financial Services

Authority and interested thirdsector organisations to consider how toenable the development o an eective market and support consumersin making sound choices.

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Deerred payments

We recommend that the Government consider changes to the currentdeerred payments scheme as this is a mechanism or helping peoplerelease unds rom housing assets. With a deerred payment, localauthorities agree to pay in advance or care i individuals cannot aordto do so without selling their home; it then recoups the money when thehouse is sold.

Evidence submitted to the Commission suggests that the availability anduse o deerred payment schemes is patchy. Local authorities do nothave to oer deerred payments, although they are encouraged to doso. Local authorities are also not currently able to charge interest on theloan and thereore running the scheme has a cost to them.

At a minimum, the Commission recommends an extension to the currentdeerred payment scheme so that it is a ull, universal oer across the

country. Anyone who would be unable to aord care charges withoutselling their home should be able to take out a deerred payment.In making this change, we believe it would be sensible or localauthorities to be allowed to charge interest to recover their costs, tomake the scheme cost neutral, and to remove the disincentive theycurrently ace in promoting the scheme. The Government may decidethat it wishes to extend the deerred payment oer urther so morepeople could benet rom the scheme.

It is or the Government to consider the best way to strengthen andstandardise the deerred payment scheme, in light o the decisions itmakes on the level o cap, means testing and the contribution to generalliving costs.


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Helping people to prepare

Planning ahead

There is very poor understanding o how the adult social care systemcurrently works and how much it can potentially cost. Many people liveunder the alse impression that social care will be ree i they need it. Ipeople are conused over how the system works and the costs that theypotentially ace, they will not prepare appropriately or the uture. Thiscan lead to amilies having to make dicult decisions at a time o crisis.

For people to have choices, they will need to plan and they will need tobe supported to do so. Those who have benetted rom the opportunityo having a ull working lie should be able to plan ahead. We understandthat those who are born with a disability or who develop a care andsupport need during their working lie may be less able to prepare.

A new awareness campaign

Our reorms will help people to plan by making clear what an individualwill need to contribute and by proposing a clear, national oer. To buildon our reorms, we recommend that the Government undertake a new

awareness campaign on the cost o care and support and the new

unding system.

In addition to changes to the social care system, we believe thereare wider barriers to saving that need to be tackled. We know thatthe Government and nancial services industry are already tryingto get more people to save into pensions. In the uture, we urge theGovernment to consider encouraging saving or social care as part o this

wider agenda to encourage savings or retirement. It may be that some othe same levers and incentives can be used to change behaviour.

We need to encourage people to think about how they would meetany social care needs they ace in later lie and ensure that they havesucient resources and knowledge to achieve the liestyle they want.

Better inormation and advice

To support our proposals, the Commission strongly recommends that

the Government should develop a new inormation and advice strategy one that both provides trustworthy basic inormation and signposts

people to urther advice. Basic inormation on how the system works andits relationship to benets and nancial products should be providednationally. Access to more tailored inormation should be availablelocally, with local government taking responsibility or signpostingpeople to reliable services and advice, irrespective o whether their care

is unded by the state or not. Particular attention should be paid tomeeting carers needs or better inormation and advice.

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In order to develop inormation and advice that really meets theneeds o users, the Commission recommends that the Governmentshould coproduce a new strategy with thirdsector organisations andother interested parties such as the Financial Services Authority andlocal government. Dierent groups would bring dierent experience,

knowledge and expertise, and help ensure that all o peoples inormationand advice needs are covered.

Consistent national inormation

Underpinning any reorms will need to be a better provision o basic,actual inormation at the national level. This is probably best donethrough a new website that brings together in one place all relevantinormation and signposts people to additional support. This shouldcover a range o issues, including:

how the overall care and support system works the dierentcomponents, and eligibility or each;

signposting to more specic advice that is tailored to an individualsneed, at the local level;

support or carers and sources o advice;nancial inormation with direction to where urther advice can

be ound particularly or the meanstested component o the adultsocial care system; and

inormation on the dierent types o services that people can purchase,such as telecare or support rom a care assistant.

All this inormation would need to be kept up to date and thesystem properly resourced. People will need to be reassured that theinormation they are accessing is reliable and can be trusted.

Local inormation and advice or allIn the uture, we believe that inormation and advice must be a universalservice oered by all local authorities. Advice should be available toall, including those ully unding their own care. It should be the roleo local authorities to make provision so everyone within their localcommunity can get the inormation and advice they need. Given this,

we strongly support the Law Commissions proposals22 that a new

social care statute should place duties on local authorities to provideinormation, advice and assistance services in their area, and to stimulate

and shape the market or services.

22 Adult Social Care, Law Commission, 2011.

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In providing a universal inormation and advice service, we believe thatlocal authorities should:

ensure that there is good quality, uptodate inormation available ortheir local populations;

provide specic advice and support relating to an individuals personalcircumstances;

oer specic support to carers, including signposting to thirdsectorsupport where appropriate;

work with trustworthy local voluntary, communitybased organisationsto provide support and advocacy services;

work with GPs, so that they can play a ar more active role in directingpeople to local sources o inormation, advice and support, whenappropriate; and

work with local community services and providers to make sure thatpeople are able to access inormation on, and purchase, the servicesthey want. Local authorities will continue to have a role in shaping thelocal market and this must include making sure people are aware o theservices that are on oer.

We also recognise the role played by dierent voluntary groups bethose physical or virtual, ormal or inormal in supporting individualsand carers. It is not the Governments role to provide this type osupport, nor would it be advisable or it to do so, but people should bedirected to such support, i appropriate.

Financial inormation and advice

Through our Call or Evidence, many told us that a lack o appropriatenancial advice was a real problem within the current system. A lack o

inormation on dierent nancial options and products may be causingmany people to make poor nancial decisions at what can be a verydistressing time.

We recommend that the Government should work in collaboration with the

Financial Services Authority and other partners to develop greater supportor those seeking inormation on fnancial planning or older age. The newMoney Advice Service already has inormation on planning or retirementand longterm care costs; we recommend that this inormation should beenhanced and eectively signposted rom other sources. We also recommend

that local authorities encourage people to seek appropriate and reliablenancial advice i appropriate either when approached or inormationabout care and support services or when an assessment is completed.

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A clear, national oer

Improving assessment

Under the current system, each local authority can decide the level at

which people are entitled to state support. Assessment processes aredierent and charging practices vary.23 There are in eect 152 dierentsystems across England one or each local authority in England.

The result o such local variability is that people in very similarcircumstances, with similar levels o need and nancial resources, can betreated very dierently and experience vastly dierent outcomes. Accessto social care is oten labelled a postcode lottery and is seen as unair.The level o variability adds complexity and leads many to be conusedabout how the system works.

Local variability also means people are unable to take their assessmentswith them should they move and their local authority changes.Individuals and amilies must go through a new assessment processand there is no guarantee that they will receive the same level o care.

Worse still, transitional arrangements between local authorities are poor,meaning people are not even able to take their current assessment withthem and use it until the new local authority completes their assessment.People are, eectively, trapped. This is detrimental to individuals well being as it may prevent them moving to a new area to work (or or aamily member to work), to move to more appropriate accommodation,or to move to be nearer to their carer.

We want this to change.We think that there should be a clearer, moreobjective eligibility ramework and portable assessments. The LawCommission has recommended that there should be a clear andconsistent assessment and eligibility process and that assessments shouldbe portable.24 We strongly support these proposals, which will ensurecompatibility with our proposals or changing the unding system.

Clearer and more consistent eligibility criteria

For our proposals to be the basis o a clear, national oer we think thateligibility or social care should be set nationally. The capped cost oercould work with the current assessment process or a time. However, asingle eligibility threshold and more consistent eligibility criteria wouldmake or a clearer, airer and more coherent system or the public.

23 Currently local authorities have to ollow national regulation on charging policy;

or domiciliary care, local authorities are able to design their own charging policieswithin national guidance.

24 Adult Social Care, The Law Commission, 2011.

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We believe that everyone, wherever they live in the country, shouldexpect to start receiving state support when their care and support needsreach the same point.

It is or the Government to determine the precise eligibility threshold

and criteria. Our recommendation is that, until the current assessmentsystem is replaced, the threshold should, at a minimum, be set at

substantial.25 Anything higher than this would be unacceptable andwould not be an eective way o managing care overall across the wholecare and support system. The corollary o this is that the support in themeanstested system must also start at this level.

Transparent, portable assessments

Currently, local authorities use FACS26 guidance to determine eligibility.This could continue in the shorter term as a basis or setting some ormo national eligibility. However, we do not think that it is suitable or asustainable, longterm settlement. We consider that the uture systemshould have a new, more objective assessment scale, with a simpliedand clearer process.

We understand that FACS takes into account a wide variety o actorsand needs, but we think that the scale lacks transparency people arenot able to work out where, approximately, they may t on the scale and

whether they are eligible or state support.

The Commission recommends that the Government should develop anew assessment measure with experts in the feld. This should be moreobjective and more easily understood, and people should be able toselassess against the scale.

A new scale will also need to ensure it covers a ull range o issues. Thereare risks to independence and wellbeing relating to dierent areas

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