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Sri Lanka: One Island Two Nations
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Sri Lanka: One Island Two Nations
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Thiranjala Weerasinghe sj.- One Island Two Nations
?????????????????????????????????????????????????Friday, June 2, 2017
What could the ‘dementia tax’ mean for your future?
The Tories have come under fire after announcing reforms to social care policy in their manifesto last month.
In particular, they drew criticism for proposals to change the rules on
how elderly people pay for their own care in later life. After just four
days, the Tories were forced to issue a “clarification” to the policy,
which itself was described as “chaotic” and “confusing”.
But amid the media furore, you might have missed the detail of the policy and the subsequent u-turn. What could it mean for you?
Cuts to social care funding
The Department of Health defines social
care as “extra care or support – practical or emotional – to lead an
active life and do the everyday things that many of us take for
granted”. Recently, the debate has focused on funding for elderly social
care.
According to the Institute for Fiscal Studies,
local authorities have cut spending on adult social care by an average
of 11 per cent across England since 2009-10. In the north-east and
London, cuts have been even more severe, at around 18 per cent in those
areas. The King’s Funddescribes the financial outlook for the next five years as “bleak”.
The amount of money spent on social care is for local councils to decide. But
the IFS points out that Tory cuts to local government spending are the
reason councils have had to reduce spending on social care.
How do people fund their own care?
Under the current system, if you’re in a care home, your local council will pay for your care if the combined value of your house and your savings is less than £23,250.
The calculation is different if you’re cared for in your own home and
receiving so-called “domiciliary care”. In those cases, councils do not
include the value of your house when they’re assessing your ability to
pay. They only look at how much you have in savings.
Whether you’re at home or in a home, once you hit that £23,250 “capital”
threshold, you have to start contributing to the cost of your care.
These contributions are not taken directly. Instead, the care costs are
drawn down from the value of your house and your savings.
But councils can’t just keep depleting the value of your assets until they are worthless. They have to leave you with a minimum of £23,250 to your name.
What did the Tories originally say?
The Tories’ original manifesto announcement gives with one hand and takes with the other.
Their giving hand offers to raise the minimum amount that councils have to leave you with to £100,000. That more than quadruples the amount of money you can pass on to your kids.
But their taking hand wants to change the arrangements for funding care
in your own home. When councils decide whether you can afford to pay for
your care in your own home, the Tories want them to include the value of your house as part of the calculation.
The Tories say this is about bringing the policies for funding
domiciliary care in line with arrangements for care in a home. It
certainly does that, but will mean more people have to pay for their
late-life care.
How many more people would need to pay for care?
There aren’t any official figures on how many more people would have to
pay for care, but we can look at the data we have to make a rough
estimate.
According to the UK Homecare Association, 873,500 people were cared for at home in 2014-15. 65 per cent of pensioners own
their own home. So on that basis we can assume that around half a
million people who need domiciliary care will be home owners.
We don’t know exactly how many of those home owners will have assets
worth more than the £100,000 threshold. But we do know that the average UK house price is £215,848, which would mean the average homeowner having to contribute to their own care costs.
So our best guess, based on the data available, is that the
number of people who would have to pay for their own care could be in
the hundreds of thousands.
These are just our estimates, and we await further research.
What was the u-turn about and does it change anything?
There was a major backlash after the Tory manifesto announced the social
care policy, forcing the party to rush out a “clarifying” statement.
The u-turn, to describe it more accurately, saw the Tories try to
mitigate the effects of the original proposal by promising to introduce a
cap on the total amount of money that someone would have to pay for
care.
But crucially, they won’t put a number on the total amount. Instead,
they’ve said they’ll launch a public consultation if they win the
election to decide at what level to set the cap. In theory, that should
mean that you will know the maximum you’ll ever have to pay.
Without a hard figure, it’s difficult to predict the effect on pensioners of the u-turn.