Dilnot diluted

Jeremy Hunt’s recent announcement about social care funding has been met with a mixture of cautious relief that something is being done to tackle the crisis, and disappointment that Dilnot’s more generous proposals are not being fully implemented.

Social care funding is in crisis not only because of the pressures of an ageing population at a time of local authority cuts, which have seen £1.89bn cuts to social care budgets between 2010 and June 2012, but also because while people assume that if the worst happens the state will support them, in reality only those with the lowest savings and the greatest need will get help. The rest are left to navigate an uneven, fractured and expensive private market in care. As a result, family members have to shoulder an often crippling care load to fill the gaps, and when a condition deteriorates so much that outside care is needed, the person who needs care risks losing their savings, and their home.

When I interviewed carers last year for a study on their pensions savings decision-making, the sense of injustice was palpable. Those facing care home costs for their partners or parents, or themselves, were angry that, having paid into the state through national insurance and having saved the state thousands through the provision of unpaid care (the measly Carers’ Allowance was another source of grievance), they were expected to pay the full costs of their misfortune. This was made worse by the knowledge that those who saved less through their lifetimes, who had (in their view) made fewer sacrifices, been less thrifty, were being rewarded with state help.

Potential costs of residential care were described as a ‘black cloud’ hanging over families – they felt unable to save towards them, to take any action to limit the effect, but knew that they were likely to swallow up their savings and lifestyle in the near future. The uncertainty coupled with the lack of control over their current finances (caring and disability are expensive even before social care costs) caused a huge amount of anxiety.

The diluted Dilnot proposals put forward recently will go some way to easing these concerns. Far more people will be brought into the state system by the increased means-testing threshold, reducing some of the feeling of injustice, but a huge amount of work needs to be done to increase awareness and understanding of our care system.

Significantly, in my study, while all carers were involved to a greater or lesser degree with the social care system, it was only those carers who were caring for people already in residential care, or very likely to need it in the near future, or who had had parents in residential care in the past, who appeared aware of the potential effect of care home costs and who worried about it. However, even those aware of the risk and cost of social care, fully expecting to have to pay for care costs in the near future, did not act on this knowledge. For some, it was too unpleasant to contemplate, or too complex – they didn’t understand who had to pay what. In addition, given their financial circumstances, often greatly affected by caring, they simply could not afford to save enough to cover residential care costs even if they tried.

The Dilnot report argued that making the maximum costs of long-term care an individual would be liable for more transparent would enable an effective insurance market to emerge to help people protect themselves against these costs. Hunt has argued that these could take the form of an additional payment in a pension policy, but we should be cautious about the potential for this. The additional £40,000 people are expected to cover over the amount proposed by Dilnot will raise the cost of the insurance, at a time when wages are stagnating and people struggling to cover daily costs. There is a parallel crisis in pensions, with millions under-saving for retirement or not saving at all. While auto-enrolment may start rectifying this situation, the minimum contributions are already too low to provide adequately for retirement: there’s a long way to go before there’s an effective partnership between the state, individuals, employers and insurance firms providing a decent income and support for care in old age. This should be the aim, however, and requires the pension and care provision to be considered together as the costs of old age.

This is also an area where awareness needs to be raised so that people understand their individual risk of needing long-term care, and the need to take out insurance. Research has highlighted the limits of people’s ability to predict whether they are likely to need to rely on social care. Gillian Parkerfound that the risk of needing long-term care is seen as endemic for others but not for oneself, but at the same time, when they thought about what they would need if they developed a long-term condition, people tended to predict they would need more help than they actually would. Despite this, (and possibly because they felt they had a lower personal risk of needing care) those Parker interviewed revealed little spontaneous enthusiasm for long-term care insurance, but became more enthusiastic when shown the relevant risk figures, suggesting information is an important element of precautionary activity.

Parker found that over half of those interviewed would take out insurance if they had a one in four risk of needing care. However, some were unwilling because they felt it was too soon to think about it, or because they wanted to stay in control over their money, while others did not have a full understanding of the concept of insurance. She found that those who were more risk averse were more susceptible to ‘expert’ advice, which seemed to heighten their awareness of risk, while others were not risk averse and unlikely to respond to such information. She argued that some people did not engage in long-term planning even when they knew the risks of not doing so, and concluded that “while one can set people to think about a risk issue it is much more difficult to do anything about it, even when they recognise that they are currently not well protected”^[1].

While Dilnot himself has lent some support to the recent proposals, the report his commission produced warned that with regard to the cap on costs: “Anything above £50,000 could mean people with lower incomes and lower wealth would not receive adequate protection; anything below £25,000 would suffer the same drawbacks as full social insurance, jeopardising our principles of sustainability and resilience. In our view, moving outside the range of £25,000 to £50,000 could mean that the overall reforms would fail to satisfy our criteria on fairness and sustainability.”^[2]  These risks remain, and threaten to undercut commitment to the system.

While recognising the limits of public finances, it’s essential to face up to the fact that social care is going to grow as a problem, and that public spending in this area has to be seen as investment, not waste. Properly training social care assistants, opening up an effective and flourishing market in provision rather than the patchy, underfunded market on offer now – where many carers earn below the minimum wage as firms don’t pay them for time spent travelling – and getting unwilling carers back into the work they’re qualified to do, will bring benefits to society and peace of mind to those needing care and their families.

With Andy Burnham’s proposal to integrate health and social care, Labour is showing that it recognises that new thinking is needed in these areas. Simply leaving responsibility for care, liability for most care costs, and for planning for the worst cannot be left up to individuals to manage alone. To achieve ‘one nation’, Labour must recognise these are burdens that can only be lifted if they are shared, between the family, the state, and potentially employers. Fully implementing Dilnot’s proposals (ending the postcode lottery in care support as well as regularising the funding of social care) would be an important first step. Understanding how people make decisions, and how best to encourage them to take responsibility – and recognising the limits to this – are also essential.