Significance of u-turn on absolute limits to care funding

By Lenore Rice

The Conservative Party would prefer to call it a clarification rather than a u-turn, but either way, Theresa May has announced that there would be an “absolute limit on the amount people have to pay for their care costs”.

Just a week before her recent announcement the Conservatives had launched a manifesto that included a reform of care funding for the elderly. Currently residential care has to be paid for by the individual if they have assets over £23,250. An option to defer the payment for their residential care allows many homeowners to hold on to their property until they die, or a surviving partner living in the property dies. Those who receive care at home do not currently have any similar obligation to contribute to the costs of their care, however the Conservative Party manifesto proposed to change this.

The reform would involve people receiving domiciliary care contributing to the cost, with their home taken into consideration along with their other assets. The reforms also included an increase in the amount of protecting savings and assets from £23,250 to £100,000, however because property is considered as part of the assets, many people would immediately over that amount and would be liable to contribute to the cost of their care. While it is expected that many of the “poorest older people” would benefit from the increase to the threshold, it would have a significant impact on middle-class people, and in particular their ability to leave any inheritance to their family.

The manifesto did not specify if there would be a cap on the amount that would be payable by carers, despite a previous recommendation from economist Sir Andrew Dilnot of a lifetime cap that had been accepted by the government in 2013 and was due to be introduced in April of last year, and was subsequently postponed to April 2020. The cap would have seen contributions limited to £72,000, but it was not mentioned in the Conservative party manifesto as part of the reform on nursing care funding.

The omission of a cap was criticised by opposition leaders as punishing those needing social care, and in particular those who suffer from dementia and other long-term conditions. Jeremy Corbyn, leader of the Labour party, called it a “tax on dementia”, and it quickly became known as the “dementia tax”.

The reforms were designed to deal with high net worth individuals who may own a property worth hundreds of thousands of pounds, but are not liable to contribute to the expensive residential care they receive, which could cost the taxpayers as much as £200,000.

The policy is widely considered to have made a significant dent in Theresa May’s lead over Jeremy Corbyn in the polls, and it is in that context that Theresa May made her announcement that a government green paper will consult on the option of a limit on individuals’ care costs, as well as the implementation of a £100,000 floor. She added that the consultation will include “an absolute limit on the amount people have to pay for their care costs”, and pledged that the reforms represented “the right funding model for social care” and “nobody has to sell their family home to pay for care”. People receiving care would never have to go below £100,000 of their savings in order to fund their care, in order to protect their ability to leave an inheritance to their family.

If you require legal advice in respect of inheritance tax, estate planning, or any other matter related to nursery care funding, including enduring powers of attorney and writing a Will, contact one of the estate planning solicitors at Wilson Nesbitt in Belfast or Bangor by clicking here.