The Dilnot report: we explain all you need to know about funding old age

The Dilnot review is expected to say older and disabled people who use support services should contribute up to £50,000. So what is the current position and what do you need to change?

Older and disabled people should have to pay up to £50,000 towards their own care costs, a review is expected to recommend tomorrow.

The Dilnot Commission, an independent body chaired by the economist Andrew Dilnot, is publishing its recommendations on the funding of social care and support in England. In preparation for the report we explain what you need to know about social care.

What is social care?

It is the care and support services that help frail and disabled people remain independent, active and safe. This might include helping someone bathe and preparing cooked meals. Support services can be provided in someone's home, in a community centre or in a care home.

The costs of such care are either paid for by individuals or, on a means-tested basis, by local authorities in the form of specific services or cash payments that enable people to make their own care and support arrangements.

How do you qualify for means-tested help?

If social services assess someone as needing residential care in England and they have less than £14,250 in financial assets, he or she will qualify for local authority long-term care. Those with savings or assets (including their home if they live alone) of between £14,250 and £23,250 will get some help towards costs, but those with assets or savings of more than £23,250 will have to pay for the full cost of their care.

If they are assessed as needing care at home, they are entitled to help from the local authority but can be charged for it up to the full cost of the help required. The value of their savings is assessed, as is their income, but the value of their house is not taken into account. Charging for care at home is done under local rules, so varies between local authorities.

Charges made by a council should only be as high as the actual cost of providing the care – the council is not able to make a profit through the charges – and should not leave anyone below the current level of Pension Guarantee Credit plus a buffer of 25%.

Why do we need a review of funding arrangements?

Older people make up the largest group of social care users and although the number of people over the age of 85 has risen by two-thirds since 2004, local authority budgets for social care have stood still since then and are now being cut. Demand far outstrips supply.

The charity AgeUK says councils are rationing services by offering support only to people with very high levels of care needs: those who need help getting out of bed, going to the toilet, washing and other essential daily tasks.

Even then, they often get an inadequate level of support. People living in their own home may only have short visits to help dress and wash (AgeUK cites anecdotal cases of older care recipients being made to sit on the toilet while being fed their lunch because the carer doesn't have time to do the two things separately), while the fees paid to support people in care homes are often unrealistically low.

A further complication is that each council decides for itself how much to spend on older people's care. This means that levels of care and the qualification criteria vary: while you might qualify for help in one borough, you might not in another. AgeUK estimates that currently there are 800,000 older people who need care but do not receive it from the state, and that this will increase to one million by 2014.

At the same time, people are failing to make adequate provision to pay for care if they don't qualify for means-tested help. A survey for the housing and care charity Anchor has found that only 6% of those questioned were saving for old-age care. Yet only 8% would willingly sell their home to pay for care; 44% thought the government should foot the whole cost, but only 14% would be happy to pay higher taxes to fund this.

So what is the Dilnot report likely to say?

It is likely to recommend that the government sets a cap on an individual's contribution towards his or her own care costs over their lifetime, with some suggesting a figure of between £35,000 and £50,000, with the government meeting any costs above the cap.

The cap will not include the "hotel" costs of staying in a residential home, and as these average at about £50,000 per person in residential care, the combined total could easily wipe out any capital built up through owning a home.

However, Dilnot may also recommend that the means test upper limit should be raised, allowing people to keep more of the assets they have built up over the years.

When is this likely to become effective?

Any legislation based on the recommendations will only be implemented in 2014 at the earliest – meaning that someone going into care today with an average life expectancy of two years will not see any benefits.

But it's far from certain that the government will accept these recommendations, which will involve considerable extra spending by the state. The government needs to spend a minimum of £3bn a year to cope with the rising number of older people and deal with shortfalls before the Dilnot proposals are even taken into account, according to AgeUK.

So what should I do to prepare for care costs in old age?

First seek advice and read around the subject. Although there are specialist products designed to help people pay for long-term care, they are complicated and usually very expensive. Good sources of information include the websites Money Advice Service,, and AgeUK. If you prefer to speak to someone, you can find a specialist adviser through the Society of Later Life Advisers.

Insurance policies are available to pay for immediate-needs care and pre-funded care. Pre-funded policies are not popular, not least because you may never need to claim on them and so lose your money. Immediate care annuities are more commonly used by families wanting a hedge against part or all of the cost of care fees should their older relatives live longer than their capital.

Currently two companies – Partnership and Axa – dominate this market, and the initial outlay can be enormous. But if Dilnot's recommendations are accepted, insurance products designed to meet the cost of care up to the cap are likely to become mainstream and hopefully cheaper and more simple.

Will I have to sell my home to fund my own care?

Not necessarily. If you are married and your spouse needs to continue living in your home, its value will not be included in the means-testing calculations.

Even if it does have to be included, you might be able to build up alternative savings or take out insurance to cover the cost of care. Alternatively, your home could be rented out and your care costs paid from the income. However, this will need supervision by and the support of relatives to work effectively.


Jill Insley

The GuardianTramp

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