David Bell: Dilnot blueprint will be a relief to many older people

ANDREW Dilnot's report is aimed at the problems of funding social care in England, but it has important implications for Scotland.

It recommends the maximum lifetime contribution towards social care costs should be capped at 35,000. This will bring relief to many older people who worry they will have to sell their house to pay for care-home fees.

The Scottish system is very similar to that in England. Individuals with assets of more than 23,000 are fully liable for their care-home fees. The Scottish Government insures us against the costs of health care, prescriptions and university tuition fees, but not against care home costs. The private market will insure us, at reasonable cost, against car accidents and theft, but not against care home fees. Most baby-boomers are home owners and, therefore, their assets are likely to exceed 23,000. This means that, in the future, the majority of care home residents will have to pay their fees. In 2003-4, 26 per cent of long-stay residents funded their own care. By 2008-9, this had increased to 31 per cent.

The major difference in funding north and south of the Border comes in the nursing and personal care elements of care home fees. Scots self-funding care-home residents receive 156 per week if they need personal care. In England, there is no equivalent payment. If they need nursing care, Scots get a further 71 per week, while in England, care home residents receive a more generous 108.70.

An average care-home fee is about 550 per week. This means that contribution from the Scottish Government covers 28 per cent of costs if only free personal care is available and 41 per cent if the person is assessed as needing both nursing and personal care. Older people have to find the rest from their own resources. This is where Dilnot's proposal comes in. By limiting these costs to 35,000, he argues that will make the system fairer and more transparent. Applying his proposal to Scotland, someone being charged 550 a week and receiving free personal care would have to pay for the first 88 weeks: after that, they would exceed the 35,000 limit on lifetime contribution. Similarly, a person receiving both free nursing and personal care would pay for 108 weeks before they exceeded the lifetime contribution.

The present system is also a massive deterrent to saving. It makes sense to run down your assets below 23,000 and have all of your care provided free by the state. Dilnot proposes to increase this limit to 100,000.

The Scottish system is more generous in some aspects than in England. But it has not removed the risk of losing almost all one's assets as a result of an extended stay in a care home.

• David Bell is professor of economics at Stirling University.