The health and care levy: what does it mean for social care?

After the recent announcement of an extra tax to fund adult social care in England and to help the NHS recover from the pandemic, Natasha Curry takes a closer look at what it means for the social care sector. This blog was originally published in the BMJ on 10 September.

Blog post

Published: 17/09/2021

Excitement about the recent unveiling of the long-awaited plan to fix social care in England quickly gave way to consternation when it was revealed that health would get the bulk of the cash. Social care is set to get just £5.4 billion of the anticipated £36 billion, spread across three years.

Setting aside the debate about national insurance, the proposals for how the money is to be spent have also divided the social care crowd. Those with glasses half full have hailed a good start. The camp with half empty glasses have been left feeling severely short-changed.

What’s the plan?

Surprisingly for something said to be ready in July 2019, it provides scant detail. A white paper – promised “later this year” – will hopefully offer more, but for now we know that plans centre on: a cap, a floor, some workforce support, and changes to fees paid to providers.

Capped costs

The headline act was the much-anticipated cap on care costs that will see no one spend more than £86,000 on care over their lifetime. First proposed 10 years ago, the idea is not new, but the level at which the cap is set is approximately double that in the original Dilnot proposals. While the new cap may offer some certainty to the estimated one in seven who face catastrophic costs, it will do little to assist the other six.

As the cap will take effect in October 2023, costs incurred up until then will not count. Another detail to note is that spending on “hotel” costs (bed and board) in residential care are not included in the cap. If you were in your own home you would incur costs for food and power, and so it is thought reasonable to expect people to pay. This means that people will have to find the money for these costs (which currently vary regionally and by care home) on top of their £86,000 care costs. The government’s primary intention to stop people selling their homes may not be realistic for many.

Furthermore, only “personal care” costs will be covered by the cap. This is usually a narrow set of services centred on the basics of existing: dressing, washing, eating, using the toilet, moving from bed to chair. Many people of all ages draw on social care because they need support to use public transport, go to work, or socialise. The eventual definition of “personal care” will be crucial to determining whether it helps people to live or merely exist.

Raised floor

The lesser-known, but arguably more significant, support act to the cap is the “floor” – the level of savings and assets an individual can hold on to and still be eligible for council-funded care. The current paltry £23,250 level (above which you’re left paying for all your care) has been raised to £100,000. People with assets and savings below this upper threshold will be able to approach their council for funding. When someone’s assets and savings fall below £20,000, full council funding may kick in – between the lower and upper levels, it is assumed council support will taper as it does now. The existing requirement for people even with means below £20,000 to contribute from their income remains. 

While the raising of the floor offers potential for more people to access council funding, it will not necessarily guarantee it. As now, it will depend on what type of care councils decide to fund and at what level of severity. Over the last decade, council cuts have inevitably seen funding increasingly targeting people with the very highest needs – leaving many with few means and moderate needs unable to access council funding.

Workforce support and provider fees

The only defined allocation is £500 million for workforce development. Investment in training and wellbeing is desperately needed, but this pot does nothing to address the immediate issues of low pay and poor contractual conditions which, along with the impact of mandatory vaccines, Brexit, and new immigration rules, are leaving posts unfilled and providers struggling to provide safe care.

Finally, plans to tackle the problem of councils paying providers unsustainable fees (which sees providers unfairly charging people who pay for themselves more to make ends meet) recognise that the fragile market of provision needs shoring up. The effectiveness of these changes largely depend on councils having enough money to fund higher fees that will now additionally have to absorb the increased NI costs. The document states that councils will be required to shoulder additional costs through “appropriate local level mitigations”. Cuts to budgets, along with Covid-19, have left council finances in a precarious state and many will struggle to raise extra money from local sources. 

Is social care fixed?

There is one thing that everyone is likely to agree on and that is that the package presented falls short of the comprehensive reform that social care so badly needs. The new revenue stream offers hope of longer-term sustainable funding being possible in future, but only if the cash can be wrestled back from the NHS. The sums promised so far look modest in light of what they are intended to deliver.

Social care suffers from deep structural issues that cannot be fixed by money alone. These proposals simply tinker around the edges of the existing broken system and offer little guarantee that more people will be able to access care. Moreover, the government missed an opportunity to build support around an ambition for a fairer, more sustainable, and better social care system that seeks to improve people’s lives. 

This blog was originally published in the BMJ on 10 September and is reproduced with permission.

Suggested citation

Curry N (2021) “The health and care levy: what does it mean for social care?”, Nuffield Trust comment.