Paying for care: Wales & the Barnett consequentials

Even by Nick Clegg's standards, it seemed a bold pledge. "We will make sure," wrote the deputy prime minister, "no-one is forced to sell their home to pay for care in their lifetime and no-one sees their life savings disappear just because they developed the wrong kind of illness."

The phrase "in their lifetime" might make you want to check the smallprint but Mr Clegg's article gave the impression that future generations will not have to follow the 30,000 to 40,000 people a year who have sold their home to pay for care fees.

Instead, the most anyone would have to pay would be £75,000 for the costs of social care, although they would still have to meet the "bed and board" costs of residential care, which could set them back up to £10,000 a year. An increase in the means-test threshold means that people with assets worth less than £123,000 (including their home) won't have to pay the full cost.

That does suggest you could still end up with a pretty hefty bill that would either have to be paid for by selling your home or using your life savings.

The big idea, apparently, is to create demand for a new insurance industry product to allow those of us in work to insure ourselves against future costs. Ministers believe people would take out insurance in the same way they contribute to pensions (except too few of us save enough for our retirement).

Details emerged as the UK government gave its response to the report of the Dilnot commission on the funding of care and support, chaired by economist and Olchfa Comprehensive old boy, Andrew Dilnot.

Now you may have noticed that the above policy applies only to England, but Wales isn't an island and what happens in England will have an impact west of Offa's Dyke.

The English scheme will be funded by revenues from a freeze on inheritance tax (cue outrage in the Daily Mail) and the abolition of the state second pension. It will cost around £1bn a year and Welsh MPs have already got their calculators out to try to work out what the Welsh government can expect as a result.

Under what's known as the Barnett formula, the Welsh government gets a consequential population-linked share of extra spending in comparable areas in England that are devolved in Wales. (Jargon alert: the next few sentences include too many references to "Barnett consequentials")

At Westminster, Labour MP Chris Bryant asked Health Secretary, Jeremy Hunt yesterday: "What discussions have you had with the Welsh assembly, because I presume that there will be a Barnett consequential - money going to Wales as a result of today's announcement? How much will that be?"

Jeremy Hunt: "All the Barnett consequential issues are decided by the Treasury, and we will of course comply with them."

Montgomeryshire Tory Glyn Davies had done the calculations himself: "The Barnett consequentials should mean an extra £10 million for Wales if the proposal costs about £1 bn. What discussions has he had with the Welsh government to encourage them at least to invest the Barnett consequentials in social care, given that it is as big a problem in Wales as it is in England?"

Mr Hunt said he hadn't yet established what those "Barnett consequentials" would be.

The Welsh government could choose to spend any Barnett consequentials" more of less as it chooses, but what are its plans for social care?

A Welsh government spokesperson said: "We recognise the current arrangements for paying for social care are outdated and need reform. While Andrew Dilnot's report relates to England, this is an issue of vital importance for people in Wales and the rest of the UK.

"We would need to see the sums in England before doing our own analysis and deciding what the best policy on paying for care in Wales should look like."

The Welsh government has been consulting with "key stakeholders" to find out what kind of system would command "broad public support" and will issue a report on the outcome of that consultation within the next few weeks.

UPDATE: Anthony Hilton, city editor of the London Evening Standard is unimpressed, warning that "anyone thinking from the hype of this morning's headlines that they no longer need to worry should think again."