Commenting on the delay to the Social Care Green Paper, and the launch of a report from the Housing, Communities and Local Government and Health and Social Care Committees calling for a “social care premium”, Jon Hatchett, Partner at Hymans Robertson, said:

“Social care funding is in crisis, and repeated attempts to reform the system over the past decade have fallen on deaf political ears. This delay to the social care Green Paper is yet another example of the thorny political challenge of working out who will pay so that some of the most needy in our society can live with a greater degree of dignity. 

“Local Authorities are at the forefront of the challenge, with statutory responsibilities which they are not being properly financed to deliver.   The most recent ADASS report said some councils in England simply “cannot go on” without long-term funding to underpin care. But we need to remember that local government funding can only ever be part of the solution.

“Currently social care is an uninsured risk both to society and to individuals. Germany has recognised that it’s a risk that needs to be protected. The UK should follow suit.

Discussing what we need to see in the Green Paper, Karen Brolly, Head of Products, Life and Financial Services added:   

“Even if social care is brought into the national insurance system, there are question marks over how far that could go. At the extreme it could reduce the need for a private insurance market to develop to protect people against the risks, but given the political challenges, it’s hard to see how any government could get a system through that provides wholesale insurance.

“To that end, the report correctly identifies, as Andrew Dilnot did seven years ago this Wednesday, a cost cap for social care is required. We urgently need the Government to be clear on what the State will cover in respect of long-term care.  Alongside potential tax reform this will be a cornerstone of bringing insurance solutions to the many, to help with the potentially uncertain and financially catastrophic implications of long term care.  In fact it is already on the statute, but there’s been no political willpower to implement. And in that vacuum insurers, understandably, have been reluctant to develop products. Once we have a clear and stable structure, then products can be designed to meet individuals’ needs. Product innovation is difficult in an unstable policy environment.

“Until we have clarity around who will pay for what, people will also assume the State will foot at least a large part of the bill.  Our research shows that most expect the state to pay. Only a third of individuals of all ages support the view that their homes or other sources of wealth should be used to pay for care in old age, dropping to 18% for baby boomers*. This demonstrates why making changes to the system is fraught with political difficulties. But with a care system on its knees, and hopefully a growing appreciation of the scale of the issue, we hope to see more courage from the government in its Green Paper.”

Explaining how the proposals put forward today still lead a funding gap for accommodation costs, Jon continued:

“How to fund the State’s contribution to adult social care is an issue that’s never been settled. The average cost of care without nursing is £30k per annum. Put this in the context of the average Defined Contribution total pension pot size of £27k and we get a sense of the scale of the issue. We need to look at ways to help keep people comfortably and happily in their homes for as long as possible, both to support their own wellbeing and to alleviate funding pressures.”

Discussing the intergenerational aspect of the social care premium proposal, he added:

“It is good that this proposal recognises the intergenerational challenges.  But the political challenges in tackling them given the age distribution of voters in the UK, is one of the reasons progress for the past decade has been glacial.  Now is the time for us to do more: we owe it to our society. For those with family members or loved ones suffering in the current system, which has many very well intentioned but underfunded organisations, they are desperate for a solution.

“Today’s report correctly highlights some of the challenges of change, as well as suggesting a parliamentary commission to help drive consensus.  Much of the suggestions and analysis are spot on, but minimising further delay is crucial.”