The UK government has been accused of leaving poorer households worse off after it removed “a central element of progressivity” in its highly anticipated social care reform.
Sir Andrew Dilnot, architect of the original blueprint for the reforms, told the Treasury select committee that the changes, specifically rejected as unfair by his commission a decade ago, were “very disappointing”. He warned that anybody with assets of less than £186,000 — about 60 per cent of people who end up needing social care — would be worse off under the changes, which were published on Wednesday night.
Speaking after Dilnot’s testimony, Prime Minister Boris Johnson insisted his social care blueprint was a “massive improvement for everybody in the whole country”. For the first time in history “we’re stopping people having to pay unlimited quantities for their care”, he told reporters.
But the proposals are likely to put Johnson on a collision course with Tory MPs representing the so-called Red Wall of former Labour seats in the Midlands and northern England, with parliamentarians due to vote on the measures next week.
Voters in those areas are likely to bear the brunt of the changes to the plan, with Dilnot telling MPs that less-well off people, particularly those living in “northern and other less-high house-price areas” were likely to be hit hardest on average.
One MP representing a northern constituency told the FT: “This has raised real concerns among northern MPs that the commitments made don’t seem to be very clear and we are seeking urgent reassurances.”
Tensions are growing between Johnson and his backbenchers following the fallout from the Westminster sleaze scandal and a backlash over the revised plans to HS2. Another Tory backbencher warned of a possible rebellion ahead of the vote on the proposals. “Unless there are major reassurances there will be a big push back,” they said.
The social care plans originally devised by Dilnot had two elements aimed at providing both an insurance system, so that no one would face overwhelming costs, and a more generous means-tested element to ensure that any big gains did not just go to the rich.
They would have insured everyone, so that no one would have to pay more than £86,000, and people with lower levels of assets when they fell ill would effectively have a lower cap on their private expense. This was because the means-tested state support they received when their assets fell below £100,000 would be included in the £86,000 cap. Calculations showed that no one would lose more than half of their assets in care costs.
However, the government’s new proposals eliminate the interaction between the means-tested system and the cap, so that all assets get wiped out except for £20,000 in care costs, until private expenditure hits the cap. This does not affect people with large assets, but those with assets below £100,000 have to keep whittling them down until they fall to £20,000. Only then will the state pick up the full cost.
Former Conservative minister Damian Green, an authority on social care, said: “It illustrates the problem of a national cap, which is that you get geographical unfairness. If you have one fixed figure then whatever you do there will be geographical disparities,” he said.
Those disparities can be stark for someone with dementia, facing lifetime care costs potentially rising to £500,000, according to FT estimates, based on the Dilnot proposals.
Under the current system, ultimately all of the care costs apart from £14,250 need to be funded privately, through selling assets and using pension incomes. This potentially wipes out all of the assets of poor and rich people unlucky enough to face catastrophic care costs because the risks are uninsured.
In his testimony, Dilnot said that while he had a “very strong positive feeling” about the government’s decision to introduce a “national risk pool” for social care, the proposed change “removes a central element of progressivity, which we did think was an important part of the structure”.
It was “perfectly plausible” that, for some people, the new regulation would double the length of time required to reach the protection of the cap, he said.
One Tory backbencher acknowledged that “the people most affected are those in constituencies where house prices are lower”.
The backbencher added: “I don’t know how much money this saves the Treasury but it’s clearly driven by a desire to make the cap as inexpensive as possible for the taxpayer.”
Liz Kendall, shadow social care minister, said: “Ordinary working people are facing a tax hike that will do nothing to improve care now, and instead of protecting their parents’ homes, will only protect the homes of the wealthiest in our society.”
She added: “Once again the Tories have failed to stand up for those who need care and their families. Our elderly people deserve better.”