The Conservative party manifesto includes a proposal to raise the limit for means testing of capital to £100,000. Wrigleys consider the implications.

The Care Act 2014 requires that local authorities shall:

  1. Assess the needs of people who appear to them may have a need for social care.

  2. Decide which of those needs are eligible for support.

  3. Prepare a care plan as to how those eligible needs will be met.

  4. Determine a personal budget for the costs of the care plan which the local authority will meet.

    The average house price in England is £216,000 which means that large numbers of people living in their own homes will self fund their care. In these circumstances the Care Act process set out above will not apply.

    For this group, there will be no such thing as needs which are eligible for local authority financial support.

    This leads to 2 consequences. Either,

  1. Home owners will take advantage of private sector financial products such as equity release and then commission their own care.

    Or

  2. The local authority will still commission and pay for the care but take out a land charge against the property to recover this when the property is sold

    The first will mean that the assessment and commissioning of care at home is taken outside of local authority social services input altogether.

    The second, in consequence of anti-avoidance rules, will mean that local authorities will effectively sequester the homes of those needing care, rationing the extent that they can use equity in their homes to pay for care and determining whether other uses they may have for that equity care are acceptable. On this scenario, conventional equity release will become a thing of the past as it will be regarded as an avoidance measure.

    The current deferred payment agreement whereby residential care home fees are secured against a property is an example of what will be applied to homes where the adult is still resident. It seems likely that many people will refuse to sign this and care will not be provided.