Money Box Live: Care costs, will you pay less?

0:00This BBC podcast is supported by ads outside the UK.

0:30all in one place, so you can invest your way. Visit schwab.com to learn more. How many streaming subscriptions do you have? Is it the same for your business? Avoid it by having all your business on one platform. Try Odoo for free at odoo.com. That's O-D-O-O dot com. Hello. One of the biggest financial questions facing people as they get older is, who pays for care if it's needed. Andy Burnham has promised big changes in England, because whether you need help in your own home or the support of residential care, the cost can be staggering. Six grand a month, that's ridiculous. How can anybody afford that?

1:10Nobody can. In this Moneybox Live podcast, we are doing the sums and we're asking what those new proposals might mean for your money and how it works across the whole of the UK. Now, before we get into what might happen, let's take a look at how things work right now. Pat is in her 80s and cares at home for her husband, Geoff, in England. And she joins us now. Pat, great to have you on the programme. Hello. Hi. Now, tell me then about you and Geoff, because I believe it's your anniversary soon. It's our anniversary, the end of this month, yes. We've been married 53 years. 53 years. Congratulations.

1:45I've said that you're caring for Geoff at home. Can you tell me a bit about a typical day, what kind of needs he has? I didn't quite hear what you said. Sorry, forgive me. You're caring for Geoff at home. Can you tell me a bit about what that's like? I am caring for Geoff at home, yes. What kind of needs does he have? I'm caring for Geoff at home. He's got Parkinson's and Lewy body dementia. I'm trying to stop the mobile. It's always at the worst times, don't worry He was diagnosed in 2016 and the first five years were not too difficult but it's got progressively worse since he's had various falls and fractures and he now needs 24 hours supervision and a lot of physical care because he can't do very much at all for himself And so that's been going on he's been ill for 10 years, for a decade.

2:46Are you paying for all that care yourselves? We get help from the local authority towards the care costs. And the local authority pays about two thirds and I pay about a third out of my savings. If we'd had joint savings, we probably wouldn't have had any help. but we've always had separate accounts and separate savings so his savings are minimal and therefore he gets some help from the local authority and I have to subsidise it from my savings. Do you mind if I ask how much you're paying out of your own money? We're getting just under£3 ,500 a month. And then you're topping up about a number of thirds.

3:45And I subsidise by about over a thousand a month. It's a lot of money, Pat. Did you plan financially for any of that?

3:58It's diminishing. I mean, I worked from age 15 to 74. So I, although not in highly paid work, so I've been able to keep us going and support him but the money is going down rapidly and if he went into residential care it would be£100 ,000 a year in this area. It's such a large amount isn't it? Pat thank you so much for being with us on the programme I'd really like it if you could stay with us please because I want to hear more of your thoughts But now I'm going to introduce today's experts. I'm joined by Claire Rintoul, the CEO of Chef Care, which is a charity that operates nine care homes. Also, the independent financial advisor, Jonathan Rowley from the Society of Later Life Advisors.

4:52And Fiona Colley from the charity Carers Scotland. Hello. Good to have you all with us. Hi. Fiona, we've heard just some of the kind of breathtaking costs from Pat there. Andy Burnham has said he wants to create a national care service for England where personal care would be free at the point of use. Can you tell us what personal care covers, what it means? Well, it would cover things like bathing and showering, shaving, using the toilet, managing incontinence, help with eating, getting in and out of bed and moving around the house and things like managing and taking medication. So the real kind of sharp end of care.

5:32This is already the model in Scotland, isn't it? This free at the point of use. How does it work there? Yes, so it's been the model since 2002 and it was extended in 2019 to cover under 65. So up to that point, it had only been people who were 65 and over. So if you're getting care at home, your personal care is free. So your basic living tasks are free. There are other costs that you can be charged for, things like transport, day services, community alarms. So people will make a contribution towards their care, but their personal care is free. And that carries on into residential care if they have to go into residential care as well.

6:19Although you still would have to pay what's called bed and board costs, so the costs in a care home. Well, we'll talk about residential care separately. It's different across the nations in the UK. So in Wales, the maximum account for non-residential care is£100 a week. In Northern Ireland, it's based on means testing. Fiona, I suppose the big question is, is this system working in Scotland? It is. And I think that the principle of people having their basic care needs met to have dignity and independence and that there wouldn't be barriers to those costs being met from your needs being met by cost.

7:00However, demand still continues to be high and that's around our ageing population. And so councils themselves are managing social care through eligibility criteria. So some people are missing out. Yes, so if you have critical or substantial needs, then you will have your needs met. If your needs are lower or moderate, you may have to wait or you may not get them met at all. So there's a bit of a threshold of where there's a consideration around risk and need for individuals. So it can mean that you can't get the support that you need. And we also have the challenges, and I know that these are the same across the whole of the UK, of having the level of care services that we actually need.

7:55And sometimes people find that within their area there's not something that they need. Well, the Scottish government says that local authorities are responsible for the delivery of social care. However, it says it's clear the current status quo is not good enough and it will be looking at developing solutions. Pat I want to bring you back in if I may how much would that free personal care potentially help you and Jeff? Can you repeat that question please? Forgive me how much would care your free personal care subsidised personal care be to help you and your husband? It's an enormous help the care rates are about£25 an hour and Geoff needs 24-hour care and supervision.

8:42So without the support from the local authority, he would have to go into residential provision. And you've said that that residential provision could be 100 ,000 a year. I mean, there are all sorts of other additional costs that aren't just social care. For example, we have to have a wheelchair accessible vehicle. And because he was over 65 when his condition started, he doesn't qualify for motability. So we've had to fund buying that. And there are just lots of additional costs over and above the practical help. Yes. And I basically subsidise all of that. Claire, I want to bring you in here and sort of look at that care home cost.

9:38Pat's mentioned£100 ,000 a year, potentially, if Geoff were to move into a care home. Now, the average cost is just under£1 ,300 a week. That's according to the comparison site carehome.co.uk. It does depend on where you live and on what you actually need. But why is it so expensive? Well, ours aren't quite that expensive, actually. we are a charity and ours vary between 953 and 1111 so we're not making a profit but yeah it's a really good question so when I looked into this on average about 73 percent of that is the staff so that's the carers and housekeepers cooks activity workers finance admin about another 8.5 percent is what we call resident costs so things like food cleaning equipment cleaning costs all of the equipment that people need to keep them safe furniture and there's all sorts of things behind the scenes that cost money utility costs are about 30 pounds a week obviously these things fluctuate and there are other sort of hidden costs things like insurance insurance legal fees audit fees they're about three percent should i keep going there's no no no i mean it's i think it's i think it's really really important to kind of hear some of those costs but the health care data provider lang busan suggested residential care for frail older people makes up around 45 percent of the total costs i don't know if you know that that's the case uh at your homes but if personal care was funded how much cheaper would it potentially be for people in your care homes?

11:16Probably about 40 % of the fee for us goes on personal care so that would leave people paying the other 60 % themselves. Fiona do you find that care homes in Scotland are cheaper? I think that the description is probably the average so around about that £1 ,000 a week, slightly more, some are slightly less. So that tends to be the average price. But did you see the prices come down when that funding for personal care was brought in? No, I think the people who saw the change would be the people who received the personal care. So actually the cost to the care home themselves don't change, but actually the funding model changes and how it's delivered to the care provider themselves.

12:10Pat, you're caring for Geoff. You're also in your 80s. Have you planned for your own care? No, there's nothing left to do that. It sounds like a hollow laugh.

12:31we thought we'd planned for our retirement and future and had been reasonable in terms of all our expenditure and our planning we just didn't expect this long-term care needs you know we'd cared for aged parents for 18 months two years in our own home. We didn't anticipate that either of us would need ongoing care for so long. Pat, thank you so much for taking the time to speak to us because I'm sure it's very, very busy. Thank you very much for being with us on Moneybox Live. Jonathan, change can take a long time, can't it? Potential changes coming in England, potential changes being suggested for Wales.

13:20For anyone who hasn't thought about care costs, What should or can people be doing now financially to prepare? Yeah, well, that's a great question. I think people need to sort of look at their income, where they are now. Most people will have some form of state pension in retirement. They then might have private pension provision, which they can then estimate what their income is. And also look at all of the benefits that are available that they may be entitled to for care or help in the home. Most people, though, if you look at the average income that people have, it's no way going to cover£100 ,000 a year for an eventual stay maybe in a care home.

14:02So go to the local maybe areas that have homes, see how much they cost, and then just see how much money you might need to allocate towards funding your own care. It's difficult, isn't it? Because it's hard enough making people think about retirement and pensions, let alone thinking potentially about care.

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15:46carer at a time. Thank you very much for that. Okay, well, we've heard some of the staggering costs for care home fees. The government in England told us that right now, too many people are being let down by what it calls a broken social care system, having to pay eye-watering sums for their care and having to sell their homes to fund it. A lot of people have been getting in touch because they do feel quite strongly about the idea of selling a home to pay for care. Here's Lisa, who contacted the BBC's Your Voice, and she's speaking to our producer, Sarah Rogers. Mum was at home and she was deteriorating.

16:19We tried to keep her out of the care homes because mum really didn't want to go in the care homes. Don't you put me in one of those places I don't want to go. and she said I don't want to spend what hard-earned money we've saved me and your dad have saved all these years on on care home at what is in essence 1500 pound a week 6 000 nearly 6 000 pound a month I mean who who can afford that without selling the family home and it nearly came to that point for you didn't it it did I mean it was it was very stressful for me and my sister selling the house I don't know how much it's worth say 150 ,000 how long is that going to put mum in a home with all the other bills that are going to come with it it's just awful it's just awful you try do your best you can for them as as they've done for you if this is what it takes we've got to do it at the end she would have been glad if that's the right term we managed to keep hold of the house and that she could leave Sarah and I some stability for our future now and that we're not going to have to struggle.

17:32It's still very hard losing your mum you know it was a blessing because she was time for her to go it was time. What would you like us to know about your mum? Mum was such a strong character she was a very formidable she was a fantastic lady. Lisa, thank you very much indeed. Fiona, what's really tough about this is the emotional versus the financial, isn't it? It's wanting to do what's best and it's having all these decisions to make. Yes, absolutely. And we try to encourage carers and families to think about their future and their future planning. And unfortunately, when we talk about residential care, there are significant costs involved even if you are self even if you're not self-funding and you will have to give your give up your pension and your occupational pension towards the costs of care so it's a really big decision and we try to support individuals to be careful at home for as long as they possibly can be and want to be because sometimes people do want a change to move into residential care.

18:50But actually, it's so difficult for families making those decisions. Jonathan, the family home is a real area of contention, isn't it? Because as Lisa said, in many cases, the money won't last long. It can often be the last family asset. And a lot of parents dream of giving it to their children. They do. But we try and encourage our clients at Hamnet Wealth to think of the home as the place that they reside. and you buy a house for all the right reasons to give you that security. But we have to accept as a society that we will be paying for our own care. So if I've got a property and I needed to go into a residential setting, which was going to satisfy my needs or a family member, I would be trying to take the emotion out of it because there's huge amounts of money tied up in property because of the boom that we've had over the last 25, 30 years.

19:42and just think of it as do you want to choose the care that you get and if you need that choice and you want somewhere good, then maybe you need to let go of that emotional tie on the property, although that's hard to hear for many people. Hard to hear and hard to do. Some parents do try workarounds, don't they, like putting the family home in the child's name years before. Does that actually protect it? No, and we spend a lot of our time at the Society of Later Life Advisors saying to people, why would you give any money or property away if in the future you think you would need that? Also, a lot of people that encourage people to do this, you know, if you look at it from the health of the local authorities point of view, you say you haven't got a house, you've given it away, but you've carried on living in it.

20:27So you've clearly had a gift with a reservation there. So I think they would just look through that and say, well, we know why you did that. Therefore, it wouldn't be an effective planning tool. OK, thank you. Linda has emailed. She says she used all of her mother's savings on home care and then care home fees. She says she and her mum believed it was entirely morally reasonable to use her savings and her property to fund her care. But they haven't been able to sell her retirement apartment. So have had to reluctantly go to the council for funding. Fiona, explain this. When the savings are gone, the local authority can step in.

20:59At what point does that happen? it's different for each nation of the UK which is very helpful but in Scotland once your capital limits so that includes the value of your home is below£35 ,000 and then the local authority will step in to support the cost of your care and that they will fund it completely but you You have to make a contribution through your pension and any occupational or other savings that you have. And you will receive back what's called a personal expenses allowance, which is about£35 a week. And that's for your kind of incidentals for yourself. So the local authority will support.

21:46But sometimes it may limit your choice of care home, depending on if you're local authority funded as opposed to self-funded. You've got a wider choice. OK, Claire, the latest official data shows that just under half of people in older age care homes are self-funding. So they're paying for it themselves. Do you get paid the same from self-funders and local authorities? No, and we have a higher ratio of people who are funded by the local authority. For us, it's 70%. And that's why we try and keep our costs down. But the way the social care sector works is that the private fee payers do subsidise the local authority funded people because the local authority don't pay enough.

22:30They don't cover the costs. So that feels like a kind of hidden, unpleasant secret. But that's the only way the sector works. So our local authority pays£767 a week. Well, our cheapest fee is£953. So that obviously doesn't work. It's not their fault. They don't get enough funding from national government. But that cross-subsidy is what enables people to keep going. Well, the local government association told Moneybox that in many areas, beds at care homes are bought in bulk, providing a certainty of income to providers. But it said, until the sector is adequately funded, the consequences of lack of resources and a system that is under strain will remain.

23:08Claire, if somebody does run out of cash and the local authority takes over the cost, can an elderly person end up being moved somewhere cheaper? They can. Most lots of care home providers charge a top-up fee. We don't for that deliberate reason, because you don't want somebody having to move home just because they've run out of money. But I think we probably are the minority that we don't charge those top up fees. We've had an email from Susie who said her mum had Alzheimer's and her care home costs were£8 ,000 a month. She says they sold the home to pay the bills. But another elderly family member was nursed through cancer in her home with visiting nurses and special equipment.

23:44And she asks why dementia is treated differently to other illnesses and says, why is my mother's condition bankrupting her and bringing about her financial impoverishment and destitution? Susie, thank you very much for your email. Let's hear from Moneybox listener Philip next. I'm concerned about the potential cost of care. We don't have any children. We do have significant savings, but because we've got no idea what the cost of care could be, we're wondering what we can do about it. I have come across a thing called immediate care annuity, and that seems that it might be a kind of help because it does mean that at the beginning of going into care, you can actually pay a lump sum, which depends on how old you are and various other factors, which I don't fully understand.

24:26And that means that should cover you for care for the rest of your days. But I'd like more explanation of that really in the pros and cons. Jonathan, can you do that for Philip? What exactly is a care annuity? How does it work? Yeah, so an immediate care annuity is typically when somebody does have either savings in the bank or proceeds of sale from a house sale, they may be going into a care home. And then once they've worked out what their income is, what the likely fees are going to be, you work out a shortfall. Imagine that shortfall was£50 ,000 and you're an 84-year-old. You might then go to make an application for one of these immediate care annuities and an insurance company will take on the risk of paying for your care for the rest of your life.

25:12So it is just like a normal annuity, it's based on your age when you apply for it, your outlook, your health, that type of stuff, but it's the only way that you can guarantee that the money will actually not run out. And at what point then should people consider buying one? Is it when they're already in a care home? Do you arrange one before you actually need care? Quite often, as long as you've got some known care costs, so whether that's domiciliary care in your own home or whether you're contemplating going into it, once you know that that liability has started, that's the time that you should be looking to obtain a costing.

25:45And then once you know the cost, you can plan more effectively. Thank you. Here's another email that we've had from a listener.

26:19Thank you very much for that, being spoken there by one of our team. Jonathan suggests they're not suitable for everyone. Certainly not. That's why it's imperative that you do get advice from an independent financial advisor who can navigate through the pros and the cons of purchasing an immediate care annuity. Because once that money has been paid over, what you don't want to do is to find out that you are entitled to free care because of your medical condition. So it's vital that you understand what level of support is available and then the immediate care annuity is only there to fill the gap.

26:54Do you think these annuities might become cheaper to buy if those care costs were being covered by a national care service? Well, the amount that, you know, if there is hope on the horizon, which it sounds like there is, then the amount that you would need to cover yourself, using the example of the 40-60 % rule that you said, If the gap is smaller, the amount of income that you have to buy for life will be cheaper and therefore should make it more affordable for more people. Thank you. So many people getting in touch. We've had one message from somebody talking about Pat's situation and how heartbreaking it is, saying we're in a similar situation.

27:30My father was a GP. He needs care. This person says I've had to cut down my own work in order to help at home, which shows that the costs can be quite widespread across the whole family. We've had a WhatsApp about Pat as well from somebody saying, how can anybody plan for£1 ,000 a year for personal care? It's impossible. And Charlotte says, what happens if there's no family home to sell? I'm 66 and unmarried, no children or relatives to help, savings of only£20 ,000. Thank you so much for all your messages. Well, that's all we've got time for in this Moneybox Live podcast. Huge thanks to Pat, Lisa, Philip, everybody who got in touch.

28:06And thank you, of course, to IFA Jonathan Rowley, Claire Rintol from Chef Care and Fiona Colley from Carers Scotland. Paul Lewis is back with Moneybox at midday on Saturday. He'll be talking to Dr Susie Morrissey, who's carrying out that major review of the state pension age. Don't miss that. And if there's a story or an issue you want us to take a look at, then get in touch and tell us. Here's Philip from earlier in the programme to tell you how. If you want Moneybox Live to look at a story or even appear on the programme like I did, then get in touch. You can email moneybox at bbc.co.uk or send a voice note on WhatsApp.

28:43The number is 033 06783 183. They really do read and listen to everyone. We really do. Thanks, Philip. In this podcast, the producer was Sarah Rogers, the studio manager Nathaniel Danter, production coordinator Ima Devlin. Our editor is Jess Quayle. I'm Felicity Hanna and this was a BBC News Money & Work production for BBC Sounds. Technology is changing our lives at a rapid pace, but how might it be impacting what we value? I'm Ros Atkins, and in a new series, I'm exploring how tech is shifting our ideas of worth in friendship, culture, finance and work. I'll look back at technological revolutions of the past, as well as looking forward to a world centred around AI to test whether what really matters to us is changing.

29:35From BBC Radio 4, that's The Value Crisis with me, Ros Atkins. Listen now on BBC Sounds.

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