As local authorities face the financial impact of the increase in the living wage on care budgets – a welcome but financially difficult move – specialist Insurer Partnership warns there may be more to come. Indeed, according to their latest Care Report (Click Here) the proportion of people who would be happy to reduce their assets below the £23,250 threshold in order to ensure councils pays for their long-term care has almost doubled in two years from 23% (2013) to 43% (2015).
With an estimated 126,000 entering care each year, Partnership suggests that this could see councils shouldering up to an additional £1.62 billion burden in England alone if all of those who say they intend to spend their wealth do so. Add this to the anticipated billion pound living wage bill and local services will be under more pressure than ever.
Councils in the South East (£338 million) and East (£211 million) are likely to be most impacted due to the relatively high number of costly care homes in these regions. People in the North East (47%) – already the region with the highest number of people claiming local authority support for care – are most likely to say they would spend their wealth and fall back on the state for support.
Impact of Deliberate Deprivation of Assets on Local Councils:
|Region||% who would deliberately deprive themselves||No. people entering Care Each year||Potential Cost per region|
Jim Boyd, Director of Corporate Affairs at Partnership explains:
“While the second tranche of the Care Act with its associated implications has been delayed until 2020, councils still face a significant financial burden – which is set to grow considerably if even a third of these people deliberately deprive themselves of their assets. Spending or giving away your wealth before you need care might seem attractive but it does limit your options and means that you are likely to have far less control over your future than you may hope.
“It could also be financially devastating for councils who are facing the financial impact of the introduction of the living wage on care budgets. While making wages more sustainable is naturally to be welcomed, budgets are already squeezed and local authorities are going to be carefully considering how to manage this amongst other demands on their finances. This is unlikely to lead to a satisfactory outcome for anyone.
“Those consumers who would prefer to have more choice but wish to safeguard some of their assets need to speak to a specialist financial adviser. They are fully qualified to not only show people how to structure their finances to meet their care cost obligations but also how to ring fence money to leave to their families. This may involve the use of an immediate needs annuity – the only financial product specifically designed for ensuring the cost of care can be met as it guarantees to pay an income to meet a person’s care fees no matter how long they live.”
This research forms part of Partnership’s Fourth Care Index for the full report – click https://www.partnership.co.uk/dmsdocument/550