Care costs for the elderly should be capped by the state at 35,000, a Government-commissioned review urged today.

In reforms that would cost the Government about 1.7 billion a year, the Commission on Funding of Care and Support also called for the means-tested assets threshold - how much money you can have in savings and investements - to be increased from 23,250 to 100,000.

The changes would ensure that nobody requiring residential care in retirement would have to spend more than 30% of their assets paying for it.

Key Points

  • Care costs for the elderly should be capped at 35,000 a Government-commissioned review urges
  • Commission also calls for means-tested assets threshold to be increased from 23,250 to 100,000
  • The Government is yet to give its official verdict on the proposals

The Government is yet to give its official verdict on the proposals, although the costs involved may prove a stumbling block at a time of public spending cuts.

Economist Andrew Dilnot, who chaired the commission, says: "The current system is confusing, unfair and unsustainable. People can't protect themselves against the risk of very high care costs and risk losing all their assets, including their house.

"This problem will only get worse if left as it is, with the most vulnerable in our society being the ones to suffer.

"Under our proposed system, everybody who gets free support from the state now will continue to do so and everybody else would be better off.

"Putting a limit on the maximum lifetime costs people may face will allow them to plan ahead for how they wish to meet these costs.

"By protecting a larger amount of people's assets, they need no longer fear losing everything."

The proposals

The Dilnot commission recommends that the cap on lifetime contributions to social care costs should be set at between 25,000 and 50,000, but adds that 35,000 was "the most appropriate and fair figure".

The commission also proposes that elderly people in residential care should pay for living costs such as food and accommodation, with an "appropriate" figure between 7,000 and 10,000.

The cap on care costs would help "stimulate" a market in insurance products to cover potential outlay in old age, the commission argues.

Dilnot says decisions on how to fund the reforms were "political" and up to the Government. But one of the commission's suggestions includes a specific tax increase for those in retirement.

"In particular, it would seem sensible for at least a part of the burden to fall on those over state pension age," the commission says in its final report, published today.

The eagerly-awaited recommendations come amid signs that the political parties are prepared to enter talks on an issue that has proven highly contentious in the past.

Elderly care has risen up the agenda because of increasing life expectancy. The number of people aged over 85 is expected to double over the next two decades, to 2.4 million.

Dilnot says there would be "disappointment" if a white paper on the recommendations was not published by next Easter and he adds that he would like to see reforms implemented "as soon as possible", which could be by 2014.