England’s system for funding social care for has long faced calls for reform. Unlike the NHS, the costs of an individual’s social care—help with everyday tasks like washing, dressing and eating—are not automatically covered by the state; they are means-tested on the basis of income and wealth. Those who don’t qualify for government help, which is funded by local councils, risk accumulating huge total care costs over time, often paid for by selling their home.
Several independent reviews have called for social care to be funded on the same basis as the NHS—free at the point of delivery for all those who need it. But successive Westminster governments have resisted those calls because of the cost to the public purse. Instead, Boris Johnson has resurrected a plan to put a cap on the amount anyone has to pay for their own care. The plan is popular in some quarters, but there’s a problem: the “cap” is no such thing.
The cap on care costs was first adopted by David Cameron’s government almost a decade ago. The core idea is that the state should put a limit on how much anyone has to pay toward their own care in their lifetime. Alongside the “cap,” the plan involves increasing the wealth threshold for means-tested council support so that more people qualify for it before they even reach the cap.
However, after the 2015 election, Cameron stalled on the plan, then Theresa May’s government dropped it. With local authority budgets increasingly stretched as a result of cuts to their government grants, council bosses convinced Westminster that earmarked funding should instead be diverted to prop up the existing system. Local authorities and care providers had also grown alarmed at the potential for blowback from disappointed families, as well as the risk of unintended consequences for fragile local care markets.
Why? The “capped cost” model does not actually cap the costs of people who pay for their own residential care. Under the model, if they reach the “cap” set out by government, those who are paying for their own care will only receive what their council pays providers for the care of those entitled to means-tested support, typically far lower than what people funding it themselves pay. The difference can be hundreds of pounds each week. As a result, even when they reach the “cap,” self-funders will have to carry on paying toward their care costs.
Not only that, most people will spend far more than the proposed £86,000 level of the “cap” before they even begin receiving any support. This is because councils will use the typical rate they pay—not the rate that individuals actually pay—when calculating whether self-funders have hit the “cap.”
For the last decade, this difference between what councils and individuals pay for care has either been ignored in modelling of the “capped cost” model by economists, or framed as wealthier individuals choosing to pay more for a premium room or furnishings. But the reality is that even an average person paying for average care will usually find themselves with no realistic alternative to paying higher care fees than their local authority. This reflects the limited provision available in many areas, as well as the stronger negotiating power of local authorities and their tendency to buy up lower-cost places.
In the resurrected capped cost plan, the government is making some attempt to address this issue. Those self-funding their care will be able to ask their local authority to arrange it in the hope it can negotiate lower fees on their behalf, although it is unclear whether this will actually work in practice. Local authorities will also be required to pay a higher, “fair rate” for care so those care homes with a mix of residents are less reliant on charging more to people paying for themselves.
However, these interventions won’t close the gap between popular perception of the “capped cost” model and the lived experience of families. Imagine an individual pays £600 per week for a care home place, but their local authority rate is £450. Charges that go on the cost of accommodation and food—to be set at £200 a week—are subtracted because the capped cost model only covers the costs of personal care itself, not living costs. This means the council will only contribute £250 per week when the person reaches the “cap,” leaving the individual still paying £350—better than nothing, but certainly not a “cap.” In fact, receiving council support will disqualify individuals living in care homes who pay their own fees from £90 per week in disability benefits, so the overall gain is actually just £160 per week.
Progress on reforming care funding in England has stalled for so many years because much of the public thinks the care system operates like the NHS, and politicians have been afraid to explain the truth. Against such a backdrop of misunderstanding, the “capped cost” model purports to do something it won’t, with the clear risk of adding to public confusion as well as stoking public anger that costs haven’t in fact been capped.
After the measure is implemented in 2023, people will still face catastrophic care costs, MPs will still face letters from angry families, the local authority care system will still face budget shortfalls and the long cycle of debate on how to fix all of this will likely begin again—that is, if the public are still willing to listen.
