Care Act Changes - Taxation Without Representation
Tuesday, 1st September 2015
Before retiring for the Summer Recess the Government announced that it would delay some of the initiatives set out in last year's Care Act that were due to come into effect on 1 April next year.
The Government has delayed the introduction of changes to the funding of Social Care that featured heavily in the pre-election campaign. The 'flagship' policy was the introduction of an upper limit anyone would have to pay towards their own care. However, the Care Cap was never what it seemed and would have had limited beneficial effects. Bearing in mind the burden administering the system would have placed on Local Authorities it is perhaps understandable that its introduction has been delayed.
Of more immediate concern are two changes that were to accompany the Care Cap.
The means test that is applied to people in need of 'social care' was to be altered. You would have been able to hold more savings before having to contribute to the cost of your care. The point at which you would have to meet all your care costs would also have increased. It is estimated that these changes would have led to 23,000 people with modest savings receiving a greater contribution towards their care costs.
People who required care would have been able to ask the Local Authority to arrange that support for them. At the moment anyone with assets worth more than £23,250 must arrange and pay for their own care. However, in Somerset, as in most other counties, the Local Authority uses the fact that it is a major purchaser of care to negotiate much lower rates than people could obtain for themselves.
To protect the public purse, and given increased demand and the squeeze on budgets, the Local Authority negotiates very hard. That is what we would expect, but that commercial pressure has consequences. One effect is that people who arrange their own care pay much more for the same services than is charged to care for someone funded by the Local Authority.
In effect the care that is arranged by the state is funded, in part, by people who pay for their own care. That support is not through the tax system but through the price that self-funders pay for an hour of care provided in their home or the cost of a week in residential care.
It is not clear what the value of this re-distribution of wealth is in cash terms, but overall the Government thinks that introducing the planned changes would cost Local Authorities an extra £6 billion in the next 5 years.
The care sector is also dealing with the demands of meeting the new minimum wage of £9.00 per hour by 2020 and lifting the quality of care provision generally. If the bias against self-funders persists there is a risk that the differential will increase and that the majority of home owners who go into care will be left with just £14,250 when they die.
This article can also be found in the Somerset County Gazette here.