ESS proposes ‘property loans’ for care costs
ELDERLY people could be forced to take out ‘property loans’ to pay for their care in residential homes in future as the States grapples with the growing costs of an ageing island.
Some local care homes were described in the States as ‘close to crisis point’ even before the pandemic, and there was a need to reform the sector to see off the risk of collapse.
Employment & Social Security wanted to investigate the idea of equity release or deferred loan schemes to plug the predicted gaping hole in the long-term care fund.
The fund, which currently stands at around £90m., is expected to be wiped out by 2040.
The debate was adjourned last night and the vote will take place this morning.
If successful, ESS, along with the senior committee Policy & Resources, will have to report back with plans by December next year.
The suggested new system would affect frail, elderly people who need residential care and live in a property worth over £350,000 but have little cash in the bank.
They would be required to sign up to property loans that would reduce the value of their estate when they die.
Deputy Michelle Le Clerc, the president of ESS, stressed that these loans did not mean that vulnerable people would be made to sell the family home and it would still leave an inheritance for children.
‘We have included in the policy letter and the propositions an outline of how increases in contributions could be moderated by requiring people in long-term care to make a limited contribution from their assets, whether that be cash, investments or property, including the former family home.
‘People would not be forced to sell their homes to pay for their long-term care, such a scheme would have the advantage of moderating the increases in the percentages of contribution rates, helping all contributors but particularly the younger ones who will be paying for so much longer.’
The States also agreed to increase the long-term care benefits, which are effectively grants to the private care homes.
The benefit for standard residential care will go up to £521 per week, but people with more complex needs will receive up to £1,170.
Under the current system there is no means testing for the benefits, and the gap between funding and needs is growing.
At a crossroads, Deputy Le Clerc said they did not want to put ‘the burn’ on young workers who are already burdened with higher pension costs, taxes and the cost of living.
She said the care home sector was vital and needed to be protected.
‘We have recently seen two residential homes close, there was apparently no interest shown by investors in continuing to run them as care homes.
‘There are reports of other care homes that were close to crisis point financially before Covid-19 and the effects of the pandemic will have only exacerbated this.
‘To use the phrase of the moment, we genuinely do need the care sector to revive and thrive.’
