5 The Dilnot Commission
84. The Dilnot Commission set out to establish how
the future system of funding social care could be made to be sustainable
and resilient, fairer for individuals, families and society, value
for money and as clear and simple as possible.[84]
85. The key recommendations of the Commission's report
concern the introduction of a series of caps on the contributions
required from individuals to the cost their own social care. They
recommend a cap of between £25,000 and £50,000 (£35,000
is suggested) on the amount that any individual has to pay for
their care, after which the state would bear the costs. They also
recommend that this capped figure would not include costs associated
with accommodation, food and other living costs, but that these
should subject to a separate cap of between £7,000 and £10,000
per year.[85]
86. Dilnot also recommends the implementation of
better needs assessment processes, portability of assessment,
and better assessment and services for informal carers; he argues
that the current means test threshold should be raised from £23,250
to £100,000, that eligibility for care should be standardised
across England, and that people should be able to defer payment
until their home is sold as part of their estate; finally he recommends
that a new information and advice strategy is required.[86]
87. The Committee has found that there is a broad
consensus in favour of implementing the main findings of the Dilnot
report. Gillian Manthorpe, Director of the Social Care Workforce
Research Unit at King's College, London told us:
Dilnot represents an opportunity to move this into
its next phase, even if it is not yet the entire answer, because
we do not have public confidence, at the moment, in the social
care system. We certainly do not have a good understanding of
what social care offers, how it is funded and what implications
there are for families […] The Dilnot report gives us the
best analysis we have had, probably, for a very long time. There
is a risk of giving it the thumbs down and saying, "No. It
has to go into the long grass," but that would be a very
poor outcome.[87]
Richard Humphries from the King's Fund agreed, stating
that:
The almost unanimous support given to Dilnot's recommendations
suggests we are on the cusp of not a total solution, as colleagues
have alluded to, but at least a way forward, a way through it.[88]
88. The
capped cost model proposed by the Dilnot Commission represents
an important element of the total funding model, but it is not
the whole answer. The Committee recommends that in its forthcoming
"progress report on funding", the Government should
accept the principle of capped costs and outline proposals on
where the cap should be set.
89. Dilnot also
recommends that there should be a separate cap on living costs
of between £7,000 and £10,000 per annum. We support
this and recommend that the Government accepts it.
90. The Committee
believes it is important that the future shape of social care
is not dominated by a debate about the technical details of funding.
It is essential that services are shaped by the objective of high
quality and efficient care delivery, and the funding structures
are fitted around that objective, not vice versa. It is, however,
unsurprising that there is a focus on funding issues given the
current financial stress on the care system.
91. Although
the Committee supports the implementation of the main recommendations
of Dilnot, it believes the narrow terms of reference given to
the Commission meant that the more fundamental issues about the
need for a more integrated care model were only addressed in passing
by Dilnot.
Capping care costs
92. The Committee also believes some fine-tuning
of the capping proposals is required. The charges levied for social
care, and assessment of social care need are determined in part
by local authorities. At the moment this leads to variations in
access to, and charges for, social care. These variations are
in themselves not necessarily a problem as they may simply reflect
local variations in labour costs or assessment practices. However
a problem may exist when the proposed national cap on care costs
for the individual is transposed over a local system of assessment
and pricing.
93. The system proposed by the Dilnot Commission
would require some means of assessing the care needs of all persons
who present to a local authority and then "metering"
care so that each local authority can establish when the individual
has or will reach the level of the cap.[89]
The Committee is concerned that this could create a situation
where two people with identical care needs, but who live in different
local authority areas, could reach the cap at different times.
94. The care meter could also disadvantage people
who live in areas where property prices are depressed, especially
if a higher level cap is introduced. Some recent media stories
have suggested that the level of the cap on care costs would be
set at £60,000 as opposed to between £35,000 and £50,000
suggested by the Dilnot Commission.[90]
A £60,000 cap would clearly represent a larger proportion
of the housing value of those people living in those parts of
England where a house can be bought for £60,000 or less.
95. It has been
suggested to the Committee that some of the disadvantages of the
cap expressed as a cash sum could be addressed if the cap was
expressed as a period of time. The Committee understands that
the Dilnot Commission considered this approach and rejected it
on the grounds that it would make the actual cost of the individual's
contribution dependent on the acuity of their care needs during
the period involved.
96. The Committee
recommends that the Government should look again at the principle
of expressing the cap on care costs in terms of the length of
time that people fund their social care for themselves in its
progress report on funding, ensuring the equivalence of care standards
before and after the cap is reached. Further work however is required
to address unintended anomalies caused by regional variations
in housing values and the difference between domiciliary and residential
care costs.
Financial products
97. One other element of the Dilnot proposals is
the potential stimulation of the market in financial products
that people could use to fund their contribution towards their
care needs. The Dilnot Commission report is clear that no major
financial services providers offer pre-funded insurance against
social care costs making it difficult for people to plan for the
financial consequences of having a care need later in life.[91]
The Strategic Society Centre told us that the pre-funded insurance
market for social care is unlikely to grow under the Dilnot proposals:
[…] it does not expect a prefunded insurance
market to grow in response to its recommendations or in response
to the capped-cost model. It talks about different sorts of financial
products, but in terms of prefunded insurance, which is
one of the key financial products people have often talked about
in relation to longterm care and the potential for such
a market, it is very specific in saying it does not expect that
market to develop to any significant degree in response to the
capped-cost model.[92]
This was reiterated by the Association of British
Insurers who told us that:
[…] it is unlikely you will find prefunded
products developing. It is difficult enough to get people to save
sufficient for their pensions without thinking of saving for a
product which they may not need for 40 or 50 years.[93]
98. There are some specific products that are taken
out when people have a care need, such as equity release and immediate-needs
annuities, that may grow if the cap on care costs were implemented.
Immediate needs annuities (INAs) are a type of insurance product
that individuals purchase at the point of entering residential
care. In return for a significant up-front payment, the annuity
will pay out a regular income until a person dies, covering all
(or most of) their care fees. In return for the lump-sum premium,
individuals purchasing INAs obtain protection against the possibility
that they will survive for a very long-time in residential care,
and therefore spend all or most of their wealth. However, Chris
Horlick from Partnership Assurance (a provider of financial products
in this sector) told us that the immediate needs annuities market
is small and that "I do not think the Dilnot model in any
way would attract fresh money in".[94]
99. Equity release products aim to support individuals
in retirement to access part of the value of their home. They
have been identified by Dilnot and others as a potential source
of income for older people, particularly in the context of historically
high rates of home-ownership and house price inflation experienced
over the last decade. The Committee has heard however that these
products are relatively novel and have not yet been widely taken
up. As Professor Martin Knapp told the Committee:
I also agree […] about the equity release model.
To me, it feels like the more attractive and viable approach.
It has not been any more successful in getting off the ground
than longterm care insurance until recently, but I understand
there are some experiments under way, and perhaps we can learn
from those.[95]
100. In contrast to the relative pessimism of the
financial services industry, Andrew Dilnot gave a much more upbeat
assessment of the likely market for financial products in the
future:
I have no doubt at all, having spoken to the really
big players in the financial services sector at the highest and
most senior level throughout this, that there is enthusiasm for
getting into this market. The financial services strand of the
Department of Health's consultation on this has already published
some of its developing findings. It says things like, "There
is strong support for capping care costs:—This would provide
a major opportunity for behaviour change," and, "It
would facilitate a range of financial products." That is
across the financial services sector as a whole
[…] Our view is that there would be very significant
development in two areas, mainly housing-related and pension-related,
because those are the two big assets that people build up. For
many people, once a cap is in place they will simply treat the
funding up to the cap as part of their general asset accumulation
strategy. They will want to build up some assets that they might
use to help out one of their children, go on a long holiday, build
an extension or do the things they have wanted to do. Rather than
wanting an insurance product, it will be part of their lifetime
savings strategy. They might then spend that money through either
equity release from their house or by a policy that was related
to their pension.[96]
101. The
Government should clarify the likely market for pre-funded insurance,
equity release, and immediate needs annuities, as well for pension-related
and other products. It should also articulate how it will work
with the industry to stimulate the market for these products.
84 The Commission on Funding of Care and Support, Fairer Care Funding. The report of the Commission on Funding of Care and Support, July 2011 Back
85
Ibid. Back
86
Ibid. Back
87
Q 2 Back
88
Q 7 Back
89
The Commission on Funding of Care and Support, Fairer Care
Funding. Volume 2, Analysis and Evidence Supporting the Recommendations
of the Commission, July 2011 Back
90
For example see "Social care crisis needs reform now, says
report author", The Mirror, 18 January 2012 Back
91
The Commission on Funding of Care and Support, Fairer Care Funding. The report of the Commission on Funding of Care and Support, July 2011
p39 Back
92
Q 323 Back
93
Q 325 Back
94
Q 324 Back
95
Q 2 Back
96
Q 444 Back
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