Playing the waiting game on long-term care

Charlotte Moore investigates industry reaction to the new Government’s long-term care plans.

After all the waiting and endless speculation, the election finally yielded a result common to Europe, but extremely rare in the UK: a coalition government.

Most long-term care advisers were glum about the prospect. They feared the newly formed coalition would have more pressing concerns at the forefront of its mind, such as gaining control over the public finances, rather than focusing on the problem of providing care for the eldest members of society.

The demographic time bomb afflicting Western societies is a well-known yet somehow neglected problem.

It is common knowledge that the oldest part of the population is growing more rapidly than the youngest members of society. But it is the oldest of the old that will create the biggest problems for society as they often require expensive long-term care.

According to government figures, the number of people over the age of 85 more than doubled to 1.3 million in 2008 compared with 600,000 in 1983. Advances in medical science mean the numbers will continue to grow rapidly; by 2033 that population will double again to 3.2 million.

Not on the list

Initially it appeared fears the new government would be slow to respond to these challenges were well placed. The coalition government issued a brief document about what it would and would not be addressing. Long-term care was not on the to-do list.

This caused an irate response from 28 local councils who wrote a letter of complaint. Chris Horlick, managing director of long-term care at Partnership, says: “These concerns are very understandable, a council can spend up to 50% of its discretionary spend on the elderly who need care which may represent only 1.5%-3% of the population.”

Tish Hanifan, joint chair of the Society of Later Life Advisers, says: “Even without the impending government cuts, many councils are already over-burdened with the social care costs as the growing numbers of elderly people mean they running against the tide.”

But the more detailed coalition document said the Government would appoint a commission to report on social care funding within 12 months. It will look into various options to fund long-term care including voluntary insurance to pay for care and protect assets as well as public- private partnership agreements.

Timing is, of course, the issue, as the Labour government took close on 13 years to come up with the ill-fated Personal Care at Home Bill, says Horlick.

The new commission

Many are sceptical about the announcement of a new commission. Hanifan says: “I’ve been involved in two government committees on care funding in the last three years. The commission can not come up with a solution that has not already been looked at then disregarded for various reasons.

“Announcing a new commission does not help to resolve one of the key issues: there are far too many mixed messages being given to the public.”

Hanifan and others in the long-term care advisory community say the Government should focus on clarity and providing good information.

Brian Fisher, marketing manager at AXA Lifetime Care, says: “There is so much uncertainty. The state benefit system is complicated. As a consequence, people don’t know what they are going to be entitled to when they need care and what is going to be their responsibility.”

Horlick concurs: “There is so much confusion. People don’t save enough because they assume that long-term care is part of the NHS and therefore not something that they have to think about.”

Financial constraints

But long-term care advisers are well-aware of the straightened state of the public finances and are not expecting miracles. Fisher says: “It would be unrealistic in the current climate to expect further significant contribution to long-term care funding from the state.”

Most wish the Government would have the gumption to admit there is simply not the funds available and that most will have to fund their own long-term care.

Hanifan says: “Now that we have a Conservative government in power, this seems more likely as individual responsibility is a cornerstone of their political ideology.”

The Government should spend the resources it has ensuring people are pointed towards useful education sources.

Horlick says: “I would like central and local government to work on having a much clearer responsibility to inform people on their entitlements.”

There should be an attempt to get rid of the current postcode lottery that exists. “Different councils pay different levels of money towards long-term care costs. This forces people to move across counties,” he adds.

But the key demand is the need for better information: “There needs to be better information sign-posting not only talks about the welfare benefits but also points towards those independent financial advisers who are specialised in this area,” says Horlick.

Fisher concurs: “The Government needs to start signposting people towards the IFAs that can help them plan for the future.”

Advice for advisers

So while the Government mulls its limited options, what should financial advisers do?
Andrew Neligan, a financial planner at Informed Choice, says: “From an adviser’s point of view, becoming a specialist in long-term care is an extra string to your bow. It is going to become an increasingly important part of the financial planning jigsaw as the number of people in this age group grows.”

The need to source proper financial advice remains critical. Hanifan says: “A significant number of people start out by funding themselves but then run out of money and the already overburdened local councils then have to take over care arrangements. If they had sought some financial advice at the start, they could have avoided this situation.”

Horlick says: “Our own research shows that only 4% of people in the over 50s age group would consider contacting a financial adviser for advice on funding long-term care in older age.”

Fisher says: “It is likely that the state will have to signpost people towards those financial advisers that are specialist in this area. Clever IFAs will start to gain this expertise now so that they can be ahead of the game when the commission reports in 12 months.”