People are living longer. This is a good thing, but we should not ignore the consequences. As our society ages, the costs of caring for older generations – pensions, pensioner benefits, health and social care – rise; and these are borne by working people through their taxes. As the relative number of younger people is falling, those costs increase, not just in total, but also for individuals. So if we are to give older people the dignity we owe them and younger people the opportunities they deserve, we face difficult decisions.
Guaranteed annual increases in the state pension
A decade ago, pensions were in crisis and poverty blighted the retirement of many older people. It was wrong and it has been a Conservative government that has helped to put it right. By introducing the Pensions Triple Lock and the new State Pension, we have lifted the incomes of millions of older people, reducing pensioner poverty to historically low levels. The Triple Lock has worked: it is now time to set pensions on an even course. So we will keep our promise to maintain the Triple Lock until 2020, and when it expires we will introduce a new Double Lock, meaning that pensions will rise in line with the earnings that pay for them, or in line with inflation – whichever is highest. We will also ensure that the state pension age reflects increases in life expectancy, while protecting each generation fairly.
The state pension is the basic building block for income in retirement. In addition to safeguarding the rising state pension, we will continue to support the successful expansion of auto-enrolled pensions, enabling more people to increase their retirement income with help from their employers and government; we will continue to extend auto-enrolment to small employers and make it available to the self-employed. We will promote long-term savings and pensions products, including the Lifetime ISA, to encourage and incentivise more people to make provision for long-term needs, including a house purchase and retirement.
A long-term plan for elderly care
Our system of care for the elderly is not working for the hundreds of thousands currently not getting the dignified and careful attention they deserve, nor for the people and organisations providing that care, nor is it sustainable for today’s younger people who will potentially one day face care costs themselves. It is not fair that the quality of care you receive and how much you pay for it depends in large part on where you live and whether you own your own home.
Where others have failed to lead, we will act. We have already taken immediate action, putting £2 billion into the social care system and allowing councils to raise more money for care themselves from Council Tax. We are now proposing medium and long-term solutions to put elderly care in our country on a strong and stable footing.
Under the current system, care costs deplete an individual’s assets, including in some cases the family home, down to £23,250 or even less. These costs can be catastrophic for those with modest or medium wealth. One purpose of long-term saving is to cover needs in old age; those who can should rightly contribute to their care from savings and accumulated wealth, rather than expecting current and future taxpayers to carry the cost on their behalf. Moreover, many older people have built considerable property assets due to rising property prices. Reconciling these competing pressures fairly and in a sustainable way has challenged many governments of the past. We intend to tackle this with three connected measures.
First, we will align the future basis for means-testing for domiciliary care with that for residential care, so that people are looked after in the place that is best for them. This will mean that the value of the family home will be taken into account along with other assets and income, whether care is provided at home, or in a residential or nursing care home.
Second, to ensure this is fair, we will introduce a single capital floor, set at £100,000, more than four times the current means test threshold. This will ensure that, no matter how large the cost of care turns out to be, people will always retain at least £100,000 of their savings and assets, including value in the family home.
Third, we will extend the current freedom to defer payments for residential care to those receiving care at home, so no-one will have to sell their home in their lifetime to pay for care.
Fourth, we will consult to introduce a cap on the maximum cost of care.
We believe this powerful combination maximises protection for pensioner households with modest assets, ofteninvested in the family home, while remaining affordable for taxpayers. We consider it more equitable, within and across the generations, than the proposals following the Dilnot Report, which mostly benefited a small number of wealthier people.
An efficient elderly care system which provides dignity is not merely a function of money. So our forthcoming green paper will also address system-wide issues to improve the quality of care and reduce variation in practice. This will ensure the care system works better with the NHS to reduce unnecessary and unhealthy hospital stays and delayed transfers of care, and provide better quality assurance within the care sector. We will reduce loneliness and promote technological solutions to prolong independent living, and invest in dementia research. As the majority of care is informally provided, mainly by families, we will give workers a new statutory entitlement to carer’s leave, as enjoyed in other countries.
Creating a sustainable elderly care system means making decisions about how the rising budget devoted to pensioners is spent, so we will target help where it is needed most. So we will look at Winter Fuel Payments, the largest benefit paid to pensioners, in this context. The benefit is paid regardless of need, giving money to wealthier pensioners when working people on lower incomes do not get similar support. So we will means-test Winter Fuel Payments, focusing assistance on the least well-off pensioners, who are most at risk of fuel poverty. The money released will be transferred directly to health and social care, helping to provide dignity and care to the most vulnerable pensioners and reassurance to their families. We will maintain all other pensioner benefits, including free bus passes, eye tests, prescriptions and TV licences, for the duration of this parliament.
In Summary:
- Guarantee an annual increase in the state pension through a new Double Lock to be introduced in 2020.
- Deliver a long-term plan to make the social care system fundamentally fairer, better funded and more sustainable.
- Ensure that no matter how large the cost of care turns out to be, people will always retain at least £100k of savings and assets – including the family home
- Consult to cap the overall cost of care
