The government says it will announce a “fully-funded solution” on Monday to the problem of elderly people in England who cannot afford social care. It is expected to include a £75,000 cap on the costs people pay for care and a rise in the threshold for means-tested support from £23,250 to £123,000.
Health secretary Jeremy Hunt said the “scandal” of many people selling homes to pay care bills must be tackled.
Labour said the country needed “a far bigger and bolder response”.
At present, up to 40.000 people every year are forced into selling their homes because they face unlimited care bills, says Mr Hunt – who will set out the plan in a statement to the Commons.
He told the BBC’s Andrew Marr show the aim was “to be one of the first countries in the world which creates a system where people don’t have to sell their own house”.
Deputy Prime Minister Nick Clegg, writing in the Sunday Telegraph, meanwhile, said: “We will make sure no-one is forced to sell their home to pay for care in their lifetime, and no-one sees their life savings disappear just because they developed the wrong kind of illness.”
The cost of accommodation in residential care homes averages about £7,000-£10,000 a year.
While the cap is a sizeable sum the hope is that, by establishing the principle that the state will cover the really high costs, people will start planning for their future care needs.
There are a variety of ways in which the elderly with the means to do so can free up £75,000, but one hope is that the insurance industry will start engaging with the issue and developing products that would cover old-age care.
Mr Hunt, who said 10% of people ended up paying more than £100,000 in care costs, said that “just as people make provisions for their pensions in their 20s and 30s, so we also need to be a country that prepares for social care as well”.
He added: “By setting an upper limit to how much people have to pay, then it makes it possible for insurance companies to offer policies, for people to have options on their pensions, so that anything you have to pay under the cap is covered.”
As well as introducing a cap, the government is expected to increase the means-tested threshold – there to ensure the less well-off get state help towards their care costs.
Currently anyone with assets of more than £23,250 has to pay for their care. Under the plans, it is likely the threshold will rise to £123,000 for people who need to go into a care home.
That reflects the fact that rising property prices over the years have effectively meant any home-owner falls outside the state system.
Mr Hunt is also expected to reveal that the plans will be part-funded by freezing the inheritance tax threshold – at £325,000 for individuals and £650,000 for couples – for three years from 2015.
That is despite Chancellor George Osborne’s Autumn Statement pledge, in December, to raise the threshold by 1% – to £329,000 for individuals and £658,000 for couples – in 2015/2016.
Other funding will come from previously-announced changes to National Insurance and pensions and cuts in government departments.
Labour said that, while the government’s plan would help “some people who need residential care in five or more years’ time”, it would not be fair “for people with modest homes”.
“And these proposals won’t do anything for the hundreds of thousands of elderly and disabled people who are facing a desperate daily struggle to get the care and support they need right now,” shadow minister for care and older people Liz Kendall said.
“We need a far bigger and bolder response to meet the needs of our ageing population: a genuinely integrated NHS and social care system which helps older people stay healthy and living independently in their own homes for as long as possible.”
The National Pensioners Convention said the proposals “simply tinker at the edges” and that a £75,000 cap “will help just 10% of those needing care, whilst the majority will be left to struggle on with a third-rate service”.
“The current system is dogged by means-testing, a postcode lottery of charges, a rationing of services and poor standards and nothing in the plan looks like it will address any of these concerns,” general secretary Dot Gibson said.
Older people’s charity Age UK said it was disappointed at the “high cap” of £75,000 but added “a high cap is better than no cap at all”.
The Association of British Insurers (ABI) welcomed the plans but said it was “vital that people clearly understand the cap and what costs are covered, and a national awareness campaign will be needed to make this happen”.
And Economist Ros Altmann said the proposals would create a fairer system that would allow people to “plan and prepare for care”.