Labour chancellor Rachel Reeves' plans to improve public services, including social care, in the UK are to be applauded, despite being a "daunting" challenge, UK financial services professionals have said.
Speaking to FT Adviser, Claire Reed, head of individual annuities for Aviva, said she welcomed the new government's "clear mandate" around social care reforms.
Reed said: "Having a government with a clear mandate around social care reforms means we can get more focus around our lifetime care propositions."
The company's lifetime care plan, for example, aims to help people aged 60 and above, plan for anticipated future expenses of needing care in later life.
The government first consulted Sir Andrew Dilnott in 2011 on the looming care crisis, as the cost of long-term care has risen exponentially.
Dilnott had made a series of recommendations, including setting a cap on lifetime contributions of an individual at an amount between £25,000-50,000, given the increasing costs of long-term and later-life care.
According to the 2011 Dilnott review, £35,000 was considered a fair amount as a cap. If costs exceeded that cap, then full support from the state should be available.
However, the government would only agree to an £86,000 cap on the amount anyone in England will need to spend on their personal care over their lifetime.
This was expected to have been in place in October 2023, indeed a policy paper in 2022 (Vision for Adult Social Care, 2021) set this out explicitly.
This £86,000 cap implementation was pushed back to October 2025.
Reed added: "Labour has said it will stand by the cap that the Conservatives have been talking about, which looks good. But we need to get back round the table and make sure that we as an industry support that through the propositions that we offer."
Charity Care UK has provided a useful breakdown of how the costs might work.
According to Care UK: "It should be noted that other care-related costs – such as room, food, entertainment, and utility bills – do not count towards the £86,000 cap, so residents or their families will continue to cover these costs."
Spending plans
However, whether the current spending plans will be enough to help Britain's creaking care services, without further borrowing ahead is still a question.
With a significant proportion (£7.3bn) of extra public expenditure earmarked for the NHS, social care and schools, Ian Stewart, chief economist for Deloitte, pointed to a recent interview with FT Adviser's sister title the Financial Times, in which Reeves described growth as “the only way out of this mess” and rejected the idea of a major increase in public spending funded by debt or taxes.
Labour has said it plans relatively modest tax rises, yielding just under £9bn.
According to the manifesto, this will be funded through measures such as reduced tax avoidance, changes to the taxation of UK non-domiciled residents, applying VAT to independent school fees, a windfall tax on oil and gas companies and a higher tax rate for private equity carried interest.
