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On 7 September 2021, the Prime Minister announced plans to substantially increase funding for health and social care over the next three years (2022-2025), to be funded by a new tax, the Health and Social Care Levy.

£5.4 billion of revenue from the levy will be used to support adult social care in England over the next three years. Of this:

  • £3.6 billion will be used to reform how people pay for care (including the introduction of a cap on care costs and a more generous means test)
  • £1.7 billion will be used to support wider system reform.

The reforms are set out in the Government policy paper: Build Back Better: Our plan for health and social care, with further details provided in a further policy paper published on 17 November 2021.

Past reform proposals

The 2011 Dilnot Commission recommended, among other things, a lifetime cap on personal care costs of £35,000 for people aged over 65, and a more generous social care means test.

The Coalition Government accepted the Dilnot Commission’s proposals in principle, although it altered the parameters for the cap (eg setting it at £72,000) and the means-test as well as some of the detailed policy behind the cap.

The Government initially set an implementation date of April 2016 for the reforms and the Care Act 2014 provided the legislative framework for a cap on care costs. However, implementation was delayed until April 2020 and then effectively indefinitely postponed.

In its manifesto for the 2019 general election, the Conservative Party said it would seek a cross-party consensus for proposals to reform how people pay for adult social care. It added that a prerequisite of the proposals would be that “no one needing care has to sell their home to pay for it.”

The proposed reforms

From October 2023, the Government plans to introduce a new £86,000 cap on the amount anyone in England will have to spend on their personal care over their lifetime. The cap will apply irrespective of a person’s age or income. The cap will be based on the existing framework provided by the Care Act 2014.

Only money spent on meeting a person’s personal care needs count towards the cap. Spending on daily living costs (or what are commonly referred to as “hotel costs” in a care home) will not count towards the cap.

In November 2021, the Government announced that it would seek to amend the Care Act framework so that money paid by a local authority towards meeting a person’s eligible care needs will not count towards the cap. On 18 November 2021 the Government tabled a New Clause to the Health and Care Bill for consideration on Report (699KB PDF), which provides for this change to the Care Act 2014. During the Report Stage debate on 22 November, the new clause was approved. The change, which will impact those with lower assets (ie those eligible for local authority funding support) has proved controversial.

In addition, from October 2023, the Government proposes to make the means test for accessing local authority funding support more generous. This includes increasing the upper capital limit (the threshold above which somebody is not eligible for local authority support towards their social care costs) from £23,250 to £100,000.

The Build Back Better policy paper sets out a number of other proposed changes to how people pay for social care and says that the Government will publish a white paper on wider system reform later in 2021. This wider reform will include an investment of at least £500 million in workforce measures.

Reaction and comment

The proposed reforms to the social care charging framework, including the introduction of the cap and the changes to the capital limits, received a broad welcome from a number of stakeholders. However, it has also been suggested that the reforms may “not live up to their marketing” and that the cap will “help relatively few people.”

Much of the initial stakeholder commentary focused on the broader funding of adult social care and, in particular, on whether the funding provided will be sufficient to address wider issues in the sector. These concerns have continued to be raised following the Autumn Budget and Spending Review 2021. The challenges associated with transferring revenue raised by the new levy from the NHS to social care in future years have also been raised.


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