In September 2021, the Government announced plans to implement a new £86,000 cap on the amount anyone will need to spend on their personal care over their lifetime as well as revised thresholds for means-tested care and support as follows:

(a) anyone with assets of less than £20,000 will not have to make any contribution towards their care costs; and
(b) anyone with assets between £20,000 and £100,000 will be eligible for some means-tested support.

These plans would apply to all adults in receipt of social care in England and it was intended that the arrangements would be implemented in October 2023.

In addition, the Government introduced the Fair Cost of Care (“FCC”) which aims to address the practice of local authorities paying unsustainably low rates for care. This practice has often resulted in individuals who self-fund their care paying higher fees to subsidise those individuals who are funded by the local authority at lower rates.

The FCC aims to end the subsidy situation by giving self-funders the right to access the same care rates as those funded via local authorities. When section 18(3) of the Care Act 2014 is fully enforced, individuals who self-fund their care will be able to ask their local authority to arrange care on their behalf by directly contracting with the provider at local authority rates.

To help aid the implementation of FCC, the Government committed £1.36 billion. In 2022/23, the Government allocated £162 million with a further £600 million being announced for 2023/24 and 2024/25 – this fund will help meet the costs faced by local authorities as a result of paying more sustainable rates.

What does this mean for providers?

FCC is designed to equalise fee rates between self-funders and adults who are in receipt local authority funding. The impact of the Government’s reforms to social care are unknown as it is unclear as to how many self-funders will ask their local authority to arrange their care. However, providers should bear in mind that they may be required to accept lower rates from existing self-funded users following the implementation of these reforms where a local authority arranges their care.

There is also a wider risk to the care home market that an equalisation of care rates could destabilise the market and it is unclear whether the Government’s funding for FCC will be adequate.

However, it is worth noting that daily living costs (“DLCs”) will not count towards the care cap and will still be payable even after the care cap is reached. DLCs are a notional amount to reflect that a proportion of residential care fees which are not directly linked to personal care, such as rent, food and utility bills.

To implement or not to implement?

The Chancellor has confirmed in his Autumn Statement that the proposed social care reforms will be postponed until 2025. As such, the status quo in the social care sector will remain.

There is speculation that the Prime Minister has hinted at indefinitely postponing the Government’s social care reforms however, only time will tell.

If you would like to discuss these changes or you want further information then please contact one of our Social Care Team.

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