Chancellor Philip Hammond announced in Wednesday's (8 March) Budget that an additional £2 billion will be spent on social care in England over the next three years. Out of that amount, £1 billion will be available for 2017-2018 to enable local authorities to arrange new care packages without delay.
By 2040 nearly one in four people in the UK will be aged over 65, but the country has little money set aside for elderly care, at either the state or individual level.
There is a looming social care crisis in the UK as a consequence of an ageing population and local government budget cuts, which further exacerbates the NHS crisis.
Hammond said that local authorities and the NHS need to work more closely together.
Political courage needed
Alongside additional funding, the chancellor announced measures to help local authorities who have a poor record with discharging elderly patients in order to free up beds in strained NHS hospitals.
The Budget states that in the longer term, 'the government is committed to establishing a fair and more sustainable basis for adult social care, in the face of the future demographic challenges set out in the [Office for Budget Responsibility's] Fiscal Sustainability Report'.
The chancellor further announced that a green paper on social care will be released later on in the year.
However, Steve Webb, former pension minister and policy director at Royal London, says: "A Green Paper will simply prolong the decades of dithering on how to fund social care. We have had 20 years of reviews and commissions.
"What was needed was political courage to implement a system which protects all families from potentially huge care costs and stimulates a market in care insurance for those who want greater security."
"Firm proposals would have been nice"
Mike Gordon, technical director at chartered financial planner Rutherford Wilkinson, echoes this sentiment. Gordon says: "It would be nice to see some firm proposals and timescales for proper review of funding for care costs, rather than another consultation.
"There was once a reasonable market in insurance for those wanting to protect themselves and provide for themselves.
"However almost all providers withdrew from the market as the uncertainty over what they would be entitled to, or changes to the goalposts, prevented people from planning effectively for the costs of care.
"Those who wish to remove themselves from the possibility of relying on the public purse should be encouraged with tax incentives to do so, but this never seems to be on the agenda."
Specific policy solutions have previously been suggested by former pension minister Ros Altmann.
She has told Money Observer, Moneywise's sister magazine, that such policies could include inheritance tax incentives to pass on money put aside for care free, if it hasn't been used for care; social care Isas; employer care saving plans; and elderly care vouchers. The government could also allow tax-free pension withdrawals for care.
This story was originally written for our sister magazine, Money Observer.