A question of care

We have never lived through a time of such pressure in the care industry. When Boris Johnson was elected as leader of the Conservative Party in 2019, he made a pledge to ‘fix the crisis in social care once and for all’.

After a lengthy delay, the ‘Build Back Better’ plan for social care was announced in the UK House of Commons on 7 September 2021. The government has since published a Build Back Better command paper (the Command Paper) together with a People at the Heart of Care whitepaper (the Whitepaper). Based on these documents, it seems likely that the most significant change will be the implementation of social care charging reforms. The government has outlined a bold vision for wider reforms but various stakeholders, such as the Local Government Association, have expressed concerns that the level of proposed funding falls far short of the government’s stated level of ambition.  

The subject of social care funding is a divisive political issue. The pending changes to social care funding will have far-reaching implications for those involved in estate planning and the administration of property and financial affairs.

Although the Command Paper and Whitepaper deal with planned changes in England, it is worth noting that extra funds have also been pledged to Northern Ireland, Scotland and Wales.

What has been announced?

A brief summary of the proposals is as follows:

• A cap of GBP86,000 will be introduced on the amount that anyone in England will need to spend on their eligible personal care needs throughout their lifetime.
• New capital thresholds will be introduced, meaning that anyone with assets below GBP20,000 won’t need to contribute to their personal eligible care costs from their capital assets.
• Anyone with capital assets worth between GBP20,000 and GBP100,000 will need to contribute on a ‘sliding scale’ (to be determined by local authorities) up to an amount equal to 20 per cent of their capital assets in any one year.
• Anyone with capital assets in excess of GBP100,000 will need to fund their own eligible personal care costs until they reach the care cap.
• An individual’s income may still be taken into account, but income charges will cease once the care cap has been reached.
• A person’s home will continue to be disregarded when assessing capital assets, if that person continues to live at home and receives care at home.
• The government has pledged to ‘tackle persistent unfairness’ in the social care system by ensuring that self-funders are no longer expected to effectively subsidise the cost of local authority-funded care.
• The government has also pledged GBP500 million over three years towards recruitment and training for carers and will introduce new ‘wellbeing resources’ for those working in the care sector.
• The government’s ten-year vision for adult social care includes various long-term investments such as funding for the increased use technology within the care sector and extra money to expand the choice of housing options available to those with care needs

Administrative challenges

The implementation of social care charging reforms from October 2023 represents a huge administrative challenge for central government and local authorities.

For many years, it has been difficult to secure a mandatory care needs assessment in a timely manner. Going forward, there will be an influx of ‘self-funders’ seeking care needs assessments from the local authority to ensure that at least part of their care fees count towards the lifetime cap of GBP86,000. Payments for care will not start counting towards the cap until October 2023.

In order for a local authority to establish the extent to which a self-funder will be treated as paying towards the care cap, the expectation is that they will need to:

• Carry out a needs assessment.
• Reach an eligibility determination.
• Devise a care plan.
• Agree on a personal budget.

The assessment process is time consuming and local authorities are already struggling to keep up with demand. Extra funds have been pledged towards increasing the capabilities of local authorities, but given the pending surge in demand for care needs assessments from self-funders it seems likely that there will be further backlogs.

A method will need to be created to ensure that payments by self-funders from October 2023 towards the care cap are recorded. It is unclear at this stage whether there will be a centralised ‘care account’ system or whether local authorities will be responsible for keeping the required records. Either way, information will need to be shared between local authorities if individuals move from one area to another.

Eligible care costs versus ‘hotel costs’

In the context of the care cap, it is worth noting that not all care needs will be considered by the local authority as ‘eligible’ personal care needs. As part of agreeing a personal (or notional) budget, the local authority will need to agree a weekly figure for meeting an individual’s eligible personal care needs. It is possible that the weekly contribution towards the care cap (i.e., the cost of meeting ‘eligible’ personal care needs) will bear little resemblance to the full cost of an individual’s care package, particularly for those living in their own home.

In addition, for those living in residential care homes, the hotel costs (i.e., food, accommodation, laundry, etc.) will not count towards the care cap. In some areas of the country, it is not uncommon for the ‘hotel’ cost of staying in a residential care home to represent a large proportion of the overall monthly charges. Further information is needed as to what falls within the definition of ‘hotel’ costs and this will inevitably become a contentious issue going forwards.

With all of this in mind, it is important that clients and their families understand that the GBP86,000 care cap is far from an all-encompassing shield against future care fees. Indeed, it will be possible for individuals to exhaust the value of their estate via a combination of paying GBP86,000 towards the cost of their eligible care needs, payments for ‘non-eligible care needs’ and ‘hotel’ costs.

Self-funders

It is currently possible, under s.18 of the Care Act 2014, for self-funders to ask their local authority to make care arrangements on their behalf. However, self-funders are usually charged more for the same services that local authorities are able to purchase in bulk at discounted rates. The Command Paper suggests that from October 2023, it will be possible for self-funders to access the same care rates available to local authorities. This may end the cross-subsidising of care costs but could also have the effect of increasing the overall cost of care for local authorities.

Some local authorities have already expressed concerns that the additional revenue generated by increases to national insurance and tax on share dividends will be primarily consumed by the removal of self-funder subsidies and the implementation of the care cap. However, assuming the government’s intention to rebalance the distribution of care fees can be effectively implemented, it will come as a relief to many self-funders and their families that the market will no longer be skewed against them.

Ongoing challenges

The extent to which the extra funds pledged by the government will fix the crisis in social care remains to be seen. Age UK has reported that even before the pandemic, there were approximately 122,000 vacancies in the care sector at any one time; nearly one in every ten roles. Recruiting and retaining carers is likely to be an ongoing problem, particularly at a time when many carers are feeling exhausted and undervalued.

The Command Paper refers to plans for closer integration between social care and healthcare; however, there is little detail as to how this will be achieved. The government has stated an intention to publish a further ‘integration’ whitepaper addressing this issue but at this stage, there is no suggestion that the existing NHS Continuing Healthcare framework will be affected by the reforms. For some, this may be seen as a missed opportunity as the distinction between what falls within NHS Continuing Healthcare’s ‘primary healthcare need’ (i.e., non-means-tested and fully funded) and local authority ‘social care needs’ (means-tested) can appear to be unfair and somewhat arbitrary.

What next?

Change is on the way. The primary focus appears to be the implementation of charging reforms as opposed to a wider overall of the whole system. It is clear that the issue of care funding will remain a key part of estate planning. Clients, particularly fiduciaries, will continue to require advice and guidance through the ever-changing landscape of statutory care funding.