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Tory ex-cabinet minister produces insurance-based social care proposals

Patrick Daly, PA Political Correspondent
·3-min read

A Tory former cabinet minister has come up with a social care funding plan that would involve people paying a £16,000 insurance premium after their death.

Lord Lilly, who was social security secretary in John Major’s government, said plugging the hole in social care budgets was the “biggest priority” for the sector.

It comes after Health Secretary Matt Hancock vowed on Friday to publish the details of a cross-party solution by the end of the year.

Lord Lilly has produced a plan, due to be published on Monday in a report for the Institute for Civil Society, that calls for people to agree to pay an insurance premium of £16,000 to a state-backed guarantor.

The state would then cover the costs if a stay in a care home was required in later life, with the fee taken from the sale of a property after death.

The Tory peer said the concept “wouldn’t put a huge extra burden on the public purse” while still covering the “basic costs” of care.

“It’s a very insurable risk,” he told BBC Radio 4’s Today programme.

“Only one in four people need adult social care, residential care, in their old age.

Lord Lilley's plan is due to be produced in full on Monday
Lord Lilley’s plan is due to be produced in full on Monday (Steve Parsons/PA)

“On average they spend 13 months in social care – some of course spend 10, 20 years even – and the net living costs are about £25,000 per year and people have to pay the living costs out of their pension or social security benefits.

“It’s an insurable risk but unfortunately is one the private insurance industry won’t meet. That’s why I’m proposing that we should have a state-guaranteed company which offers this possibility of insurance on a no-profit basis.”

He said the issue “can’t be put off much longer” with the number of people going into residential care “squeezed quite dramatically” from a quarter of the over-85s two decades ago to 15% today.

Lord Lilley said political infighting over plans to tackle the social care crisis – with Labour’s attempts labelled a “death tax” and former prime minister Theresa May’s plan branded a “dementia tax” – was a “sad feature” of the debate.

Health Secretary Matt Hancock
Health Secretary Matt Hancock (Dan Kitwood/PA)

The proposition came as Mr Hancock said plans to come up with a cross-party blueprint had been stalled by the coronavirus pandemic.

Chancellor Rishi Sunak raised eyebrows this week when he said work on a solution was continuing, despite Boris Johnson claiming one was finalised after he won the 2019 election.

On Thursday, the Prime Minister’s press secretary, Allegra Stratton, told reporters Covid-19 meant there “hasn’t been the chance to look in detail at what comes next” for the care sector.

The Health Secretary told a Downing Street press briefing on Friday: “I hope that we can come forward with a plan that can work and can carry broad public consensus.”

In 2011, the Dilnot report recommended capping the amount someone should pay for care in their lifetime, fixed at between £25,000 and £50,000.

Sir Andrew Dilnot, who led the review, said the 10-year delay in advancing social care plans was “a stain on our nation”.