Speaking at the inaugural Royal London annual lecture today (Thursday) Sir Andrew, the author of the report which led to the 2014 Care Act, argued the risk of facing “catastrophic” care costs remained the “last big unpooled risk” people face.
He said a mixture of social insurance and new forms of private sector financial services would help to make sure people were far better protected against this risk.
Sir Andrew said despite growing need from an ageing population, the number of people receiving residential care had barely increased since the turn of the century and consumers often have very little choice of suitable care homes with vacancies in their local authority.
He reiterated the need for a cap on care costs which would help to make private care policies viable for providers and would help to stimulate innovation in the care market.
Sir Andrew said: “Many of us will not need to spend large amounts on care in later life, but for those who do, the costs can be huge.
“We need to find a way to pool this risk rather than let it be a later life care cost lottery.
“A cap on care costs removes the catastrophic risk facing us all, and could help to stimulate more provision of private sector financial services.
“Coupled with a reform to means-tested state support, this could help tackle the ‘broken’ care market where the supply of residential and domiciliary care all too often does not meet the needs of older people.”
Sir Andrew added that the growing costs of care cannot be met wholly by the working age population, and the retired population should make a bigger contribution over time.
The Dilnot report, published in 2011, originally recommended a cap of £35,000 but this was increased to £72,000 by the coalition government and was supposed to be introduced by April 2016.
But in 2015 the previous government pushed this back to 2020 because it would add £6bn to public sector spending at a “time of consolidation”.
In its manifesto for June’s general election, the Conservative Party promised people needing social care would have to pay for it until the value of their assets – including their home – reaching a floor of £100,000.
After being faced with heavy criticism for this so-called “dementia tax” prime minister Theresa May promised to set an “absolute limit” on the amount people would have to pay for their care but did not say what this limit would be.
It has recently been suggested the government has put its consultation on social care funding on hold until next summer.
Sir Steve Webb, director of policy at Royal London and former pensions minister in the coalition government, said there was a risk the consultation would postpone politically difficult choices.
He said: “The ‘Dilnot’ cap on lifetime care cost is an important part of the answer.
“It is only fair to make sure that those who are unfortunate enough to face huge long-term care costs in later life do not face an unlimited bill, and a cap would make it more viable for providers to come forward with insurance products.
“We also need to think creatively about whether care insurance could be integrated into other financial products such as pension drawdown accounts which would help to broaden the group of people who are pooling the risk of facing huge care costs.”
Claire Walsh, chartered financial planner at East Sussex-based Aspect 8, agreed the cost of old age care is a growing problem.
She said: “The Conservatives tried to suggest some changes in the run-up to the election and we all saw how that panned out for them.
“It is tricky as it is an uncomfortable subject but we can’t bury our head in the sand.”
