Without a meaningful cap on social care costs, proposed reforms to the funding of social care could create a huge disparity of winners and losers between regions, according to analysis by Royal London.
Its analysis suggested that allowing families to protect £100,000 of their assets - one of the provisions in the proposed reforms - means that people living in lower house price areas tend to gain from the changes.
In areas with high house prices, the fact that care costs for two adults may now be set against the value of a house means that a high proportion of the house value can be taken up before state help is available.
Unless an overall cap is introduced, families in southern England and the Midlands would face higher bills; in the East of England the maximum cost of care could rise from 30 per cent of the price of the average home to 60 per cent.
The £100,000 floor has no impact in the highest house price areas – London, the South East and the East of England; the total amounts spent in care would range from £163,000 to £174,000 in these regions.
In the more northerly regions of England plus Wales and Northern Ireland, care home bills would fall; the largest fall is in the North East, where the proportion of the value of a family home taken up in care bills would fall from just over half (52.8 per cent) to under one quarter (22.3 per cent).
The analysis is based on the assumption that a new government would raise the limit for help with social care costs in England from £23,250 to £100,000; include the value of a family home in the means-test for home care and include the value of a family home in the means-test for residential care, even if a spouse was still living in the family home.
The calculation looks at what would happen if one member of a couple went into residential care and then the second member of the couple also subsequently needed residential care.
It is based on an average stay in residential care of 130 weeks and uses average weekly care costs in each English region plus Wales and Northern Ireland. The analysis then looks at what percentage of someone’s home in each region would be spent on care based on current rules and what percentage of someone’s home in each region would be spent on care based on the proposed reformed rules but without any overall cap (as this has not yet been set).
Commenting on the social care crisis, Alan Lakey, director of Highclere Financial Services, said: " Increasingly my clients, many of whom have been clients for 30 years upwards, express concern at care home or potential home care costs.
"Any changes will also have a tremendous impact on the equity release market where lenders may have to alter their contracts. Also, will the means-test calculations suggest that somebody releasing equity has purposely infringed the rules making it a purposeful retention of funds?
"This highlights why long-term care insurance, expressly designed for today's problems, should be considered a priority."
