Theresa May is right to drop the 'dementia tax' – the social care system needs considered reform

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The cost of social care is one of the few major risks it is not possible to insure against. It is a risk that affects people with dementia and other conditions not deemed eligible for free continuing care under the NHS. Get diagnosed with cancer or stroke and you will be looked after by the NHS, but suffer from dementia and you are on your own.

There is a growing sense of injustice that access to care depends on diagnosis rather than people’s needs. Injustice is accentuated by the blurred and often artificial distinction between health care and social care and the costs of care for people of even modest means. The open-ended nature of these costs, sometimes amounting to hundreds of thousands of pounds, creates anxiety for many families.

Andrew Dilnot’s 2011 report proposed to cap these costs at £35,000, a proposal accepted by the coalition government albeit at a higher limit of £72,000. The Conservative Party’s 2015 manifesto made a similar commitment.

This commitment appeared to have been rescinded by a package of changes outlined in this year’s manifesto. That was until today’s surprise announcement by Theresa May that a cap will be included in a green paper to be published if the Conservatives form the next government.

Some of the changes in the Conservatives’ manifesto, like the decision to means test winter fuel payments and to increase the level of asset protection in people’s homes from £23,000 to £100,000, are to be welcomed. There is also a logic in including the value of people’s homes in deciding who should pay for the costs of care at home. This will level the playing field between home care and residential care albeit with the risk of unintended consequences.

The disadvantages of the package however considerably outweigh the potential benefits. Social care is already at a ‘tipping point’ according to the Care Quality Commission and by our estimate there will be a funding gap in council budgets of around £2.1 billion by 2020. Even with extra funding to be redirected from money spent on winter fuel payments, it is unlikely that this gap will be bridged.

Of even greater concern is the uncertain future of the Dilnot cap. Although this was only ever a partial solution to the social care funding problem, it at least offered a way of limiting the catastrophic costs incurred by people requiring care. Last week it appeared that these costs would have to be met privately until people’s assets had been spent down to the new floor of £100,000.

In defending these proposals, Jeremy Hunt echoed the manifesto in arguing on the Today programme that the Dilnot cap was unfair because it protected people who were better off. The Prime Minister’s announcement today suggests an extraordinarily rapid rethink in response to concerns from critics that it would amount to a 'dementia tax' on core Conservative voters.

The sudden change of direction illustrates the dangers of making up policy on vital social issues in the process of writing a manifesto. It also creates a welcome breathing space to consider funding options with the care and attention they need and deserve.

The Conservatives have rightly highlighted the importance of intergenerational equity and the promised green paper should be used to debate the best way of achieving this.

The starting point should be recognition that tinkering with the existing broken system will not provide the sustainable and equitable solution to social care funding that is needed. As the Barker Commission argued in its 2014 report on a new health and care settlement, entitlements to social care should be aligned over time with those of the NHS.

This should include current and future generations of pensioners contributing more to the cost of a new settlement through tax and national insurance.

A single health and care system, paid for through a mix of public and private funding, is essential to tackle the unfairness of existing arrangements, and to overcome the lottery of care being based on diagnosis rather than need. Raising some of the revenues required to by tapping into people’s property wealth – a significant and radical departure from previous Conservative Party policy - should be part of the fundamental review we now need. But this must be done as part of a coherent and considered review rather than being determined by election deadlines.