This report investigates the current and proposed method of means testing adult social care in England and proposes an alternative formula.

With the number of UK citizens aged 75+ doubling to 10m by 2040, social care funding remains a key public policy challenge.

The Care Act 2014 included reforms designed to get social care funding onto a sustainable footing, by establishing a new level for what individuals and the state will pay in England. However, the Government has postponed its introduction until 2020 amid concerns about cost. This paper uses the delay to investigate the current and proposed method of means testing individuals and finds fault with both.

It proposes an alternative formula called the ‘preferred formula’ which it argues is fairer and does not require capital limits. It suggests that the proposed life-time cap care costs could also be unnecessary since the preferred formula contains a mechanism that automatically limits asset depletion. Using examples, the research tackles a major problem with all means testing which is that it dis-incentivises saving and so prevents more money entering the care system.

An annex finds that the proposed and preferred formulae are part of a wider family of means testing formulae that take into account both income and assets.

The new proposed system aims to:

  • Create a means test that can be used both for domiciliary and institutional care with equal clarity
  • Make the system fairer and more transparent e.g. by removing ‘cliff edges’ which cause perverse behaviours such as the deliberate disposal of assets
  • Treat people with similar personal wealth, but which is split differently in terms of income and assets, equitably and fairly
  • Simplify the rules so that anybody could reasonably be expected to undertake their own assessment with minimal financial expertise or by using resources on the internet 
  • Bring new money into the system, primarily privately from individuals and not from the state, by providing the appropriate incentives to save

Professor Les Mayhew, report author and Professor of Statistics, Cass Business School said:

“One is a common perception that care costs, like healthcare, are provided for free and so it is a waste of money to save for something the Government will pay for anyway. This belief is reinforced because for people who do save they may find that their support is taken away on a pound for pound basis depending on their income and assets. A wider consequence of this effect is that the flow of much needed new money into the social care system is arguably undermined as a result.

“As a result, our alternative system offers a new way in which people are not penalised and forced to dispose of assets, and that income and assets are split differently enabling people to be treated more fairly. We also think that the introduction of new ‘care saving accounts’ could help introduce more new money into the system, thereby reducing the stress on the state.”

Baroness Sally Greengross OBE, Chief Executive of the International Longevity Centre – UK (ILC-UK)  said:

“With the number of UK citizens aged over 75 doubling to 10 million by 2040 and with 1.3 million people already receiving social care services in England alone, the demand for long‐term care is expected to increase significantly in coming decades.

“The ILC-UK welcomes this contribution to the urgent and ongoing debate around how to support our pressurised adult social care sector, so that it can support our rapidly ageing society. At a time the CQC has described as a ‘tipping point’ for the social care sector, the suggestions contained in this report make an important contribution to a debate that can no longer be postponed.”

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