Perverse incentives

by Simon Bottery, Director of Fundraising, Policy and Communications for Independent Age

I have now been to three fringe meetings in two days at the Conservative party conference where speakers talked about 'perverse incentives'. This means accidentally encouraging people to do something other than what you intended and is being discussed in relation to the new Conservative proposal on social care.

Basically, this involves people paying £8000 when they are 65 and in return having the cost of any residential care covered. Since typically most people don't need to go into a care home, and only stay a couple of years on average if they do, the scheme will pay for itself, say the Conservatives. That seems fine, say the critics, but in reality people who pay the guarantee are more likely to expect to need care and will be more likely to go in earlier if they do- after all, they've already 'paid' for it. So the scheme creates a perverse incentive to use a home.

This and other issues like it are bound to be debated for some time, which is great as we do need social care to be high up on the party political agenda. But it does occur to me that currently for many people the incentive, perverse or not, is to stay at home if at all possible. An older person with care needs will not have to sell their home to pay those costs if they are living in it but may have to if they have moved out. Of course that's fine if they do want to stay at home (as most people say they do). But what about those who want to move into a home? The urge to safeguard the family home, perhaps to pass on to children, may create a determination to stay put no matter what the cost to themselves and their welfare.