By Richard Johnstone | 28 January 2014
The Department of Health has accused the Local Government Association of making ‘misleading’ claims about the cost of planned universal deferred payment agreements for adult social care.
In an examination of the government’s proposals to allow people to borrow from councils to cover their old-age care costs, the LGA today said loans could total £1.1bn in the first decade of the scheme, which is due to start in 2015/16. This is almost five times more than the government’s estimate of £230m over the same period.
The group called for a new national body to oversee the scheme ¬and manage the financial risks.
Under the current plans, upfront costs will be met by authorities, which will then be reimbursed from the sale of the home by the person’s estate.
LGA chair Sir Merrick Cockell said developments so far had ‘massively underestimated’ the cost to councils. Ministers have pledged £110m to help councils cover costs incurred in the first year.
‘We urge the government to consider setting up a separate national organisation, similar to the Student Loans Company, to run the deferred payment scheme on behalf of councils,’ Cockell said.
However, responding to the LGA’s figures, the Department of Health said the initiative would become cost neutral over the longer-term, due to both the interest paid on the loans and the recouping of the original costs. The LGA’s analysis extrapolated just one local authority’s projection of the likely length of care stay, and from that the cost of loans, to 152 upper-tier and unitary authorities in England, a spokeswoman stated.
‘We do not recognise these misleading figures,’ she said. ‘The universal deferred payments scheme will be cost neutral and we have committed to fully funding any upfront costs – so councils won’t be out of pocket as a result of the scheme.
‘Having an additional body to run the deferred payments scheme would just create additional and unnecessary layers of bureaucracy and costs. A universal deferred payments scheme will put an end to the current, unfair system whereby people are forced to sell their homes, often in a time of crisis, to pay for the care they need.’
The department told Public Finance that it was confident its cost estimates were sound and said it was working with the LGA and other stakeholders to refine them.
However, the Association of Directors of Adult Social Services backed the LGA’s call for a new loans agency to be created.
President Sandie Keene said it was important that older people were reassured that vital decisions concerning their care were being made within a common, state-backed context where everybody will be treated equally.
‘A scheme along the lines of the one that the LGA and Adass have proposed will have an important role to play in helping our social care services get fit for purpose in this 21st century,’ she added.
