Social care  

Industry split on level of social care cap

Industry split on level of social care cap

Providers and advisers are split on what the cap on social care costs should be with some saying it could be £50,000 whereas others want to see it set at £100,000.

The government has not specified what a cap on social care costs could look like but there are reports the prime minister is looking to increase national insurance to fund reform in this area.

A cap on cost has been suggested for a while. It was first put on the table a decade ago by Sir Andrew Dilnot and while legislation was passed to enable the government to cap the cost of care it was never implemented. 

In response to the latest rumours industry figures have discussed what such a cap should look like.

Research from Just Group found the idea of a cap was popular with 61 per cent of over-45s.

Stephen Lowe, group communications director at Just Group, said: “This level of support for capping costs reflects the fact that people know that whether they will need care is a lottery and, while happy to contribute, they fear having to write a blank cheque.

“It is important to note that the cap was originally designed to cover personal care but not spending on ‘hotel’ costs such as food and accommodation which the individual would still be expected to pay themselves.”

But Steven Cameron, pensions director at Aegon, pointed out the lower the cap is the more will need to be raised through tax and NI. 

Previous administrations have considered a cap at somewhere between £50,000 and £80,000.

Cameron said it was unlikely the cap would be under £50,000 but there was a possibility it could be set higher. 

He said: “The cap is particularly important as it avoids any individual facing ‘catastrophic’ costs and allows people to plan ahead for their contribution.

“Another approach would be to set it based on duration of needing care – so no-one would be asked to pay for more than say two years of care costs.”

But others were against the idea of a low cap saying people should use their other assets to help fund care costs.

Felix Milton, chartered financial planner at Philip J Milton & Company, said: “It’s frankly ludicrous in my eyes that the government is so fixated on ensuring that the family home is protected. 

“A cap of £50,000 is extremely generous and I’d like to see the cap doubled perhaps if that is the government’s plan, and if the family home has to be sold to pay for care, so be it.”

Other options

The industry has previously come up with a number of reform suggestions including a Care Isa and Care pension but so far nothing has been picked up by government.

But Cameron said these ideas may not have been shelved as the mooted NI hike would be to pay for the government’s share of care costs, and individuals would still need to pay their share up to the cap.