Thursday 8 June will soon be upon us, and this election has been billed as the most important for a generation. Brexit was said to be firmly at the crux. However, enter the Conservative manifesto, and their plans for social care in England, and the election campaigning has taken on an altogether different spin. By the end of this week, the Great British Public will have reached their decision, a decision that could result in seemingly very different outcomes depending on where you live.
Here in Wales, we have had our own devolved administration for quite some time, and the proposals debated will not apply here. Most people of working age are trying to balance various commitments, whether this be buying that all important first home, raising children, caring for aging parents, or saving hard for that nest egg for retirement. The reality is though, that none of us can be completely sure what the future will hold, and this makes estate planning all the more important.
The Social Services and Well-being (Wales) Act 2014, was fully implemented on 6 April 2016. The Act provided for significant changes to the social care assessment process, the rules relating to the payment for care at home and other non-residential services. The Act also determines how local authorities assess those needs, and the guidance documents that local authorities use when means testing people who may need to pay towards their services.
For those in residential care in Wales, the assets which you can hold before you are expected to contribute towards your residential care, was raised in April 2017 to £30,000, from £24,000, with a further increase proposed to £50,000. The result will be an increase in public expenditure of around £19.4 million based on figures provided in the research report completed by LE Wales, September 2016.
For non-residential services, a limit was imposed on the amount that someone living in Wales would need to contribute towards their care back in April 2011. Therefore, for those in Wales, a lot of the discussion on social care during the election campaign has been a moot point. As noted, since devolution, Wales has taken charge of its own social and health care policies. Indeed, the appointment of an Older People’s Commissioner in 2008 was the first such post in the UK.
However, with an ever ageing population, the truth is that our National Health Service and our social care system are struggling to cope with such pressure. In 2008, 18 per cent of the population of Wales was over 65; by 2033 this is expected to rise to almost 26 per cent, as provided by the Research Service, National Assembly of Wales. In Cardiff, for example, between 2007/8 to 2015/6, the number of older people (65 or over) has increased in the region from 41,494 to 47,438.
The number of older people in the whole of Wales (aged 65 or over) receiving residential services is projected to increase by 82% between 2015 to 2035, and the numbers receiving community based services by 67%, information provided by Wales Public Services 2025. The Wales Public Services 2025 further provide that local authority spending per older person has declined over the last seven years by around 13% and that £134million a year more will be needed by 2020/21. Though they also note that it is important to keep the figures in perspective, with the core NHS day-to-day budget in Wales being over £6.5 billion, and the latest figures for local authority spending on social services for the over 65s less than 10% of that at just under £0.55 billion.
But what of our neighbours across the Severn Bridge? When they are standing in that ballot box on 8 June, with pen in hand, just what options do they have? The Work and Pensions Secretary, Damian Green, has tried to explain the Conservative approach for future social care in England. Their manifesto provides that elderly people needing care at home would have to meet the costs, but could keep £100,000 after the bill is deducted from their estate. The value of your property would therefore be taken into account, regardless of where the care takes place, and there would be an extension of the deferral of payment currently used for residential care, to such care at home, which is not currently available. The Work and Pensions Secretary deems this a ‘reasonable inheritance’ to pass on to one’s family, and that this is ‘four times as good’ as the £23,500 current threshold over which an individual must pay their own residential care costs.
The policy does away with the planned £72,000 cap on care costs paid by an individual, scheduled to be introduced in 2020, with the voting public being offered a ‘floor’ of £100,000 instead. The original plans are enshrined in the Care Act 2014, and were based on the Dilnot Commission report. Labour’s approach is to argue for more social spending, the inclusion of the cap of £72,000, on how much anyone would be expected to contribute towards their own social care, and with the asset threshold also proposed to be raised. Labour have pledged to build a National Care Service, to work alongside the NHS, with the aim of creating a cohesive service, and to increase the social care budgets. So, how would all of this be funded? Various options highlighted by Mr Corbyn are wealth taxes, social care levies, and employer care contributions.
Mr Fallon, the leader of the Liberal Democrats, has called the Conservative proposals a ‘dementia tax.’ He has articulated, “If you or your loved one has or will get dementia, they are coming for you”. This is premised on the disparity of costs that can be involved in providing care to someone suffering from dementia, and those suffering from other ailments, such as a stroke. Care for those with dementia and Alzheimer’s is ever more prevalent given that, according to the Office for National Statistics, Dementia and Alzheimer’s are now the biggest cause of death in England and Wales in 2015, accounting for almost one in eight deaths, a total of 51,866 people.
Mr Fallon’s proposals are to raise income tax rates by 1p, through which he hopes to raise funding spent on the NHS and social care, alongside a health and care tax. The apparent aim being to bring the NHS and social care closer together, with a move towards free social care for those terminally ill.
Currently, people in England with assets less than £14,250 (including their home for those in residential care) do not contribute from their capital, while those with assets above £23,250 are not entitled to local authority funding. Those with assets between £14,250 and £23,250 make some contribution from their capital.
The problem of the cost of long-term social care cannot be underestimated, and the following statistics make for sobering reading. The Health and Social Care Information Centre, otherwise known as NHS Digital, provides that the Councils in England with Adult Social Services responsibilities, for their reporting year 1 April 2015 to 31 March 2016, identified gross expenditure of £16.97 billion, some 18 per cent higher than 2005/6 (£14.36 billion). Broken down, the figures provide that £13.6 billion was spent on long term care, £554 million on short term care and the remaining £3.36 billion on other social care expenditure.
Further, the Health and Social Care Information Centre figures, also provide that in 2015/6, the average cost of care per adult per week was £716 for long term residential care and £596 for long term nursing care. The average cost of internally provided Home Care was £30.75 per hour and externally provided Home Care was £14.28 per hour.
The question then becomes one of who pays to sustain us in our old age given that, as the Prime Minister has noted, there is ‘no magic money tree’. Are we comfortable that those receiving such care should contribute further? Do we raise taxes for those of working age? Do we all work longer? There is no easy answer, and with property prices ever increasing, the proposals for social care have understandably sparked much debate.
This article, I hope, highlights the importance that we all think about our future estate planning. For some of us, our need will be more immediate than others, but we all aim to reach a ripe old age, and careful estate planning could provide you with the chance to shape your future.
Written by: Claire Binnersley
Claire is a Solicitor at Wendy Hopkins Family Law Practice within our Private Client department.
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