Nearly three decades after Tony Blair told the Labour Party conference that social care needed urgent attention, the issue remains unresolved. Andy Burnham has pledged to tackle it, but Sarah Coles, head of personal finance at AJ Bell, says it makes sense to prepare for the possibility of paying for care yourself.
The long wait for reform
Politicians have promised to fix social care for almost 30 years, yet the issue remains stubbornly unresolved. Andy Burnham now wants to accelerate the work of the Casey Commission, which is examining the future of social care, but history suggests no guarantee its proposals will become policy.
“Andy Burnham has pledged to grasp the nettle on social care. However, this reform has been just around the corner for almost 30 years: Tony Blair told the Labour Party Conference in 1997 that it needed to be addressed urgently. So while we can hope for swift change, it also makes sense to have a safety net of our own, just in case,” said Sarah Coles, head of personal finance at AJ Bell.
That safety net is important because more than 20 social care commissions, inquiries and white papers have followed since 1997. Proposals have included free personal care and lifetime caps on care costs, but governments have repeatedly postponed or abandoned reform because of the enormous cost.
“It’s clear that any solution will need some kind of cross-party consensus, but this has proven elusive for so long,” Coles said.
The current means test
In England, the means test thresholds have been frozen since 2010. Anyone with assets below £14,250 has their care costs covered, while those with assets between £14,250 and £23,250 receive some support. Coles says it’s worth preparing for the possibility that you’ll still have to fund care yourself.
Practical steps to prepare
She advised: “If you’re getting older, and are assuming a family member will step in if you eventually need more support, you need to talk to them about it. Check whether this is realistic, or if you need to consider more formal care.”
Building an emergency fund covering one to three years of essential expenses can provide a buffer. Those planning further ahead could consider investing for five to 10 years or longer, while pension savers may choose to earmark part of their pot for future care costs.
Your home might also be used, through selling, renting it out, equity release or a deferred payment agreement with your local authority. Another option is a long-term care annuity, which can provide a guaranteed income towards care fees.
Don’t miss out on benefits
Lucie Spencer, partner in financial planning at Evelyn Partners, said anyone needing care should claim all their benefits. “Attendance Allowance, Pension Credit, Housing Benefit and Council Tax reductions can all significantly help with care costs. Yet many eligible individuals do not claim.”
She also said too many overlook NHS Continuing Healthcare (CHC). “If a person's primary need is a health need rather than social care, the NHS may be responsible for funding 100% of care costs through CHC. This is not means-tested.”
Spencer added: “People with severe dementia, complex nursing needs, challenging behaviours or significant medical conditions should always be screened for CHC before accepting that they must fund care themselves.”
Think twice before giving away assets
Spencer cautioned against transferring property or giving away assets to avoid care fees. “Councils can investigate 'deprivation of assets' and may still treat them as belonging to the person. This can cause problems if the gifts have been used for paying off a mortgage or spent, as in some way they will need to be paid back.”
Coles said planning is vital given Burnham's pledge, but cautioned: "You’d be forgiven for having thought that in 1997 too.”
