Homeowners to use care funding to keep their homes?

Property Surveying Articles

Two thirds of the households in England that are headed by someone aged 65 or over are owned outright, that is 6.5 million homes, and it has been estimated that by 2030 one in five of us will be over-65. 

The charity Independent Age estimates that 330,000 homeowners have had no choice but to sell their property in the last 20 years to pay for care costs. Under current rules, families must fund the full cost of care if their assets are over £23,250, which includes the value of property. 

The government has now promised to begin tackling the issue with a £5 billion cash injection for social care, and Boris Johnson has proposed a cross-party long-term ‘consensus’ to tackle ‘the injustice’ of how people pay for their care costs in old age. The basis of talks would be to find a way of protecting the homes of older people, so that they had something to pass onto their children.

With the ageing population growing faster than the working age population, the cost of keeping people in their homes is growing. The new funding announced would provide an additional £1 billion per year for five years, adding to a current budget of £21.3 billion and could come from local authorities which would be paid for by raising council taxes. However, the Health Foundation estimates that rising demand for social care and increased wage costs will result in a £3.6 billion funding defecit.

In the Prime Minister’s first speech in August, he addressed what he said was one of the ‘great policy failures’ of the last twenty years. 

“My job is to protect you and your parents or grandparents from the fear of having to sell your home to pay for the costs of care.”

The level of funding that is needed to return care access to the level available in 2009/10 is estimated to be an additional £8 billion a year in England. This would provide older and disabled people with help for basic tasks, such as getting out of bed, washing and feeding themselves.

It is though that belt-tightening by local councils has already resulted in a loss of eligibilty for around 1.5 million people. Staffing has also become a rising problem, with around 100,000 vacancies in care homes and social care.

Having ruled out protecting homeowners by increasing income tax, VAT or national insurance, or creating a separate fund raised through taxes similar to NHS funding, an alternative form of funding is now being sought. Previous unsuccessful attempts to tackle the problem were branded the ‘dementia tax’, which left older people in need of care being treated differently from, for instance, cancer patients.

Alternative methods of tackling the problem have been suggested, including voluntary care insurance. However, a more preferable approach, to ensure that everyone was able to cover future care costs, might be the introduction of a compulsory social insurance scheme for everyone once they reach the age of 40, a system that is already practiced in Japan. 

While insurance would spread the cost across society, it would mean everyone paying for a service that they might never require. And of course it would mean thousands of homes that are often too large or inappropriate for use by older or disabled home owners, locked up and unavailable to younger people in need of their own home.

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