Paying for England’s social care reforms

In September, the government revealed its long-awaited plans to reform England’s funding of social care, but many home care residents won’t reap the benefits.

On becoming Prime Minister, Boris Johnson announced that he had “…a clear plan we have prepared” to deal with the funding of social care in England. The statement was met with a certain amount of scepticism, if only because governments of every hue had a track record of failing to produce and/or implement a social care plan.

A little over 25 months after Mr Johnson’s statement, he and his Chancellor, Rishi Sunak presented details of that ‘clear plan’, parts of which remain unclear. The main part applies only to England as the devolved nations each have their own different care funding arrangements.

The main features of the proposals are:

  • The plans will apply to anyone entering care from October 2023. Earlier entrants will continue under the current rules, even after 2023. 
  • There will be a cap of £86,000 (index-linked) on the total care costs. This is not as simple as it seems: it applies only to personal care costs, not the ‘hotel costs’ of care (accommodation, food, etc.). The government’s one example of how the new regime operates was based on hotel costs of £10,000 a year – less than £28 a day. 
  • The capital limit above which an individual must meet all their care costs (until the cap is reached) will rise from the current £23,250 to £100,000 – a 330% increase. 
  • The corresponding lower capital limit, below which individuals are not required to use savings or the value of their home to meet care costs, will also rise, but by a more modest 40%, from £14,250 to £20,000.
  • If individuals have capital between those two limits, they will be expected to make an ‘income tariff’ contribution from that capital, which the government says will be “no more than 20 per cent”. In other words, if an individual’s capital is £70,000, they could have to contribute £10,000 in the first year (20% of [£70,000 – £20,000]). 

While the proposals will save some families hundreds of thousands of pounds, for others these changes will make no difference – many care home residents will not live long enough to reach the £86,000 cap.