The new government has stated that it plans to continue with implementation of the cap on care costs and changes to the means test for social care in October 2025. The cap was legislated for by their predecessors, and would set a limit on how much an individual would have to pay for social care over their lifetime. Despite several iterations of the cap since it was first proposed in 2011, none have been successfully implemented to date.
The most recent version was announced in 2021 alongside a package of wider reforms. The reforms were accompanied by £5.3 billion to cover the period from 2022 to 2025, of which £3.6 billion was intended for the cap’s implementation, increasing the means test threshold (the maximum level of assets and savings someone can hold and still be eligible for state funding – ‘the floor’) and fairer fees to care providers (together referred to as ‘charging reform’). The remaining £1.7 billion was intended for wider reform to the sector as outlined in the People at the Heart of Care white paper, including workforce, technology and housing. The latest version of the cap was legislated for in the Health and Care Act in 2022.
In the autumn of 2022, the cap and floor were postponed to October 2025 in response to growing concerns that they could not be implemented against such a challenging financial backdrop – although with much disappointment about the lack of reform progress. The then government promised the money intended for the cap and more generous means test would remain in the sector but would go instead to local authorities to manage daily pressures. So, what has happened to this funding?
The chart above shows how the funding originally allocated to social care reform (in green) has been progressively diverted into system delivery (in purple). To keep things simple, we’ve looked only at how the original £5.3 billion was spent, and not included other funding such as the discharge fund. Almost all of the funding planned for charging reform went into meeting the costs of delivering adult and children’s services. £1 billion was added to the funding for fairer fees in 2022 to create the Market Sustainability and Improvement Fund, with conditions attached around making tangible improvements in local capacity and market sustainability.
A further £570 million was added to this fund for the remaining two years of the spending period, drawn from the unallocated money held back from the wider reform spending pot. This funding was also focused on improvements to workforce recruitment and retention and capacity, rather than on wider reform.
Reform intentions have been undermined by the progressive chipping away at the funding, with the money diverted to propping up the system. And, despite this reprioritisation, pressures remain stark: a staggering 90% of directors of social care are worried about meeting their statutory duties next year.
If the government is indeed planning to go ahead with implementing the cap by October 2025, this recent history raises serious questions about how it is going to be funded. The NAO has previously warned there is “a lot to do” to implement the cap by 2025. While the costs will not hit immediately, the IFS has suggested £4 billion would need to be found by October 2028. The County Council Network’s estimate is as high as £30 billion over nine years, and is already calling for the cap to be delayed.
There are multiple calls on already very squeezed public budgets. But social care funding reform cannot wait and any delay risks deprioritising social care even further. The Autumn Budget is an opportunity for the government to invest into social care to ensure that reform can be achieved while maintaining service delivery. Not doing so risks funding being diverted from already pressurised services and people going without the care and support they need. Protecting people from exposure to unlimited costs is one of many issues that need to be addressed but it would signal a political commitment to transforming this vital sector.
With a five-year mandate, there is a real opportunity for the new government to bring forward long-awaited reforms for social care and deliver on its promises – the question now is whether it can commit the funding to make the vision a reality.
Suggested citation
Oung C (2024) " What has happened to the funding earmarked for social care reform?", Chart of the week, Nuffield Trust