On 29 July, Chancellor Rachel Reeves announced the government’s decision to cancel the cap on social care costs and social care reform.
In fairness, there has been a 25 year history of postponing plans to reform social care.
In more recent times, the former Conservative government had committed to introducing a cap on the amount a person in England needed to contribute towards their care in their lifetime. These reforms were due to be implemented in October 2023 but were delayed until October 2025.
However, the new Labour government has announced that these changes will be cancelled as part of their attempts to tackle a ‘black hole’ in the public finances. Added to that, social care was not included in Labour’s manifesto, so it is not likely that it was a hard decision to make.
Current Rules
Under the current funding rules, if a person has capital:
- Over £23,250, they will be expected to pay all social care fees themselves – known as ‘self-funding’;
- Between £14,250 and £23,250, they are treated as if they have an extra income. For every £250 (or part of £250) above £14,250, they are expected to contribute an extra £1 a week income towards their social care costs;
- Below £14,250, their capital is fully disregarded when considering whether they should pay for their own social care.
Scrapped Care Changes
Under the scraped changes to social care reform:
- The upper capital limit of £23,250 would have risen to £100,000;
- The lower capital limit of £14,250 would have increased to £20,000;
- A person with capital between £20,000 and £100,000 would have been expected to contribute towards their social care in part.
The social care reforms would also have introduced an £86,000 cap on the amount an older or disabled person would have to pay towards their support at home or in care homes. However, not all care costs would have counted towards the cap e.g. payments towards daily living costs such as rent, food and utility bills.
These abandoned changes would have enabled more people to receive support from the state.
The Future?
Chancellor Reeves has stated that Health Secretary West Streeting will be working with the sector to improve social care. For now, we will be left with the current rules despite many in the industry considering them unsatisfactory and many older people having to go without care, rely on their family and friends, or pay for care themselves with one in seven facing costs of £100,000.
It’s no wonder then that many senior clients are routinely interested in creating Wills that have the potential to protect the value of their home from being used to pay for care fees when they have passed away.