September 2021 – Issues with the Proposed Care Reform

Currently workers pay 12% National Insurance on earnings between £9,564 and £50,268. However, anything earned above this amount attracts a rate of just 2%. Consequently as income rises above £50,000, National Insurance becomes a smaller and smaller proportion of wages.

Secondly, the cap will not be introduced until October 2023. This means anyone currently in the care system will not benefit from these changes as they will not be backdated.

Thirdly, the issue of selling a home to pay for care fees - even after the cap has come into effect, people may still end up having to sell their house in the future, if they cannot pay the first £86,000 of care costs from their income or cash savings.

However, to avoid people being forced to sell their property during their lifetime, the government wants to extend the use of so-called deferred-payment agreements (DPAs).

A DPA is a loan that covers care costs up front. It is only paid back when the person dies and their home is sold to repay the loan. However, the loan is usually paid back with interest and other fees - such as administration costs may also apply. Currently councils can refuse to approve these loans, if, for example, they do not think they will get all of their money back.

As well as DPAs, the government expects more financial products, such as insurance, will be available for future care needs, because the cap provides more certainty about the costs faced.

Fourthly, there are concerns whether the amount raised will be sufficient to meet the increased costs to the NHS to meet the backlogs generated by the pandemic and whether social care will see any increase of revenue once the NHS demand has been met. Part of the reason for that is that despite the raising of an additional £36bn over three years, by the time the money is shared out across the four UK nations and social care takes a chunk, the frontline of the NHS in England is left with little more than half the £10bn a year health bosses were asking for. And it is entirely possible that local authorities will fare even worse.

The case for social care reform predates the pandemic and has been growing since the nineties but the cap only addresses one small part of the problem - protecting assets in the face of overwhelming care costs during their lifetime. People will still need to meet the threshold for care. Currently, access is rationed so only the frailest qualify resulting in half of all requests for help being turned down.

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