The Chancellor of the Exchequer, Rachel Reeves, has announced that the planned £86,000 care cost cap due to be implemented in October 2025 will now be scrapped. The decision is part of a series of cost-cutting measures following a spending audit which revealed a £22bn government overspend this year alone.
In a document outlining the measures, the Treasury said: "The previous government committed to introduce these [adult social care reforms] in October 2025 but did not put any money aside for them. The reforms are now impossible to deliver in full to previously announced timeframes."
Chancellor Reeves added: "The previous government made commitment after commitment without knowing where the money was going to come from. They did this repeatedly, knowingly and deliberately. And I am taking the first steps to clean up what they have left behind."
The £86,000 care cost cap was an integral part of the adult social care reforms due to come in from 2025. It meant that people in England would only need to pay up to £86,000 towards their care and support offered under the Care Act during their lifetime. But, the reforms also included other measures such as raising the lower and upper capital threshold to allow more people to access state-funded support.
It's estimated that scrapping the above plans will save around £1.1bn over the next two years. These reforms were first introduced in 2014 and were meant to be implemented in 2016, but have since been postponed on multiple occasions by several consecutive governments.
Other cost-saving measures introduced by the government include making the winter fuel payment means-tested, scrapping the Rwanda scheme, and cancelling the Advanced British Standard. These measures could save the government around £9 billion over the next two years, but further cost-saving announcements are expected in the Autumn Budget which has been set for 30th October 2024.
What adult social care reforms have been scrapped?
The key adult social care reform scrapped by the government is the £86,000 care cost cap which would have meant that people would only need to spend up to £86,000 to cover care offered under the Care Act during their lifetime.
However, the £86,000 care cost cap did not account for costs unrelated to care such as food, utilities, rent and other consumables which people would still need to fund separately. Scrapping the measure means that fees as part of the care offered under the Care Act remain uncapped.
The upper and lower capital thresholds which dictate when people can access state-funded care will remain the same as well. Here's an overview of what this means:
- The upper capital limit is set at £23,250 - This means that if you have more than this amount in savings and investments, you will not be eligible for local authority support for social care fees and must pay for your care costs in full.
- The lower capital limit is set at £14,250 - This means that if you have less than this amount, you won't be expected to pay anything towards your capital costs. If you have savings above this amount but below £23,250, then you will need to contribute a portion of your income towards your fees.
Your property's value is typically only taken into account if you're planning on moving into a care home permanently and if you don't have a partner who still lives in the property.
However, if the social care reforms were introduced as planned, the upper capital limit would have increased to £100,000 while the lower capital limit would have gone up to £20,000 giving more people access to some form of state-funded care.
In addition, there were plans to allow self-funders to access local authority care home fee rates which are typically lower than rates offered to people who fund their own care. Local authorities were also due to receive a package amounting to £1.36 billion to help them increase the rates they pay providers.
That being said, scrapping the plans simply means that things will remain unchanged for the time being. If you're entitled to support with your social care fees, this won't change moving forward just because the plans were scrapped.
What to do if you're worried about care costs in later life
Scrapping the care cost cap will put an additional strain on people's finances, particularly if they had budgeted the potential savings as part of their later-life care plans. But, with or without the cap, care costs can be exorbitant for the average pensioner.
Figures released earlier this month by Interactive Investor suggest that care home fees could reach £200,000 for a two-year stay in 20 years' time. Today, care home residents pay around £136,000 for a two-year stay which includes nursing care. But care costs can mount up even if you don't need a place in a care home. Age UK estimates that help at home currently costs around £25 per hour. Depending on your needs, this could work out a lot cheaper than a care home, but you will still need to budget for these costs.
If you're worried about funding your care in later life, we have an article outlining your options and how to budget for your care. This includes a range of options including selling your property, renting out your home to bridge the fees gap or even taking out an equity release product if this is right for your circumstances. We also outline the help available currently to help you work out if you're eligible for any government-funded support.
