Funding crisis looms for social care, says expert

Dr Matthew Connell argues the UK faces a funding zugzwang in social care, where political decisions to move inevitably worsen the situation. This German term describes a chess position where a player is forced to make a move that only deepens their disadvantage, yet they have no choice but to act. The Chartered Insurance Institute director notes that this compulsion applies not just to governments, but to families facing rising costs.

Decades of inaction have left the nation without a formal strategy for funding social care. In the 1990s, Frank Field developed a plan for compulsory insurance that never materialized. In 2011, Andrew Dilnot proposed a cap on care costs to protect those facing ruinous expenses, but that plan was also shelved. More recently, Theresa May’s 2017 election campaign was derailed by an alternative solution aimed at ensuring care costs would not eat into inheritances of £100,000 or less.

The wealth trap

Now, Andy Burnham has stated he will end the “major dereliction of public duty” created by these delays.

The reason successive governments have promised much but delivered little lies in the role residential housing wealth must play in any solution. The Department of Health and Social Care estimates that only one in seven people face lifetime costs exceeding £100,000. Today, the average wealth of people over 75 is around £230,000, with roughly £131,000 tied up in property. On paper, households approaching later life possess enough assets to pay for the majority of care needs.

However, for most people, a home is more than a financial asset; it is the manifestation of everything they have worked for. Governments that acknowledge this reality often face intense public backlash, sparking a sense of schadenfreude among opponents. The cost of social care is rising faster than inflation due to an ageing population. Stricter means testing for benefits actually reduced the number of older people receiving state-funded care in England by 10% between 2014-15 and 2022-23, according to the Institute for Fiscal Studies.

Planning for later life

Just as politicians must face the funding zugzwang on a national level, all but the wealthiest will have to confront it on a family level. The conversation must shift from inheritance to reducing the burden of caring for family members. Acknowledging that a portion of residential property wealth must be reserved for social care is essential for a realistic financial plan.

This will be an extremely difficult process. It is likely that only those who benefit from the expertise and guidance of a professional adviser will be able to manage it—both financially and psychologically. Without that structured approach, families risk falling into a precarious position where they cannot afford to stay in their homes or support their loved ones effectively.