Government now plan to proceed with Dilnot cap on £35,000 care bills
By Harry Phibbs
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In July, the Government published a Social Care White Paper. It apparently decided against a cap on the amount that an individual will be charged by the state for social care. Now we have a u-turn. The newspapers this morning have been briefed that there will be a cap after all. It will be £35,000 - the figure proposed by the economist Andrew Dilnot.
There are strong advantages to bringing in a cap. It will encourage people to save. At present those with savings of over £23,250 have to pay for their care. Often this means people are forced to sell their homes. There were 24,500 people who had to do this last year.
Thus the current arrangement punishes home ownership. Imagine, for example, somebody considering whether to exercise their right to buy their council home. Even with the boosted discount this would involve them paying more in mortgage payments then they typically would with heavily subsidised rent.
Yet what is the reward if, instead of having an asset to pass on to their offspring, they are forced to sell to pay for care? The current system makes the thrifty into suckers.
Then there are the politics of it. This is something that both the Lib Dems and the Conservatives could point to at the next election as an achievement. Nobody will lose their home to pay for nursing care. This is something the Labour Government, with all their rhetoric about compassion, failed to sort out in their 13 years of office.
The disadvantage is, of course, the cost to the taxpayer. This is estimated to be £1.7 billion a year but rising to £4.2 billion a year by 2025, due to the ageing population. That is why The Treasury have understandably been seeking to block it - although there is still some debate about which year it will be brought in, perhaps delayed until 2017. The amounts are loose change when the Government is borrowing £126 billion a year. However the risk is that if the public finances are still out of control at the next election boasting about plans to spend extra money will further undermine economic credibility.