• In September, the government announced major social care reforms. From October 2023 a cap will kick in when you have spent £86,000 on personal care.
• It was thought state support would count towards the cap, so poorer people could keep more of their money, but in documents published in November, the government said it wouldn’t.
• This means people with fewer assets have to pay for longer and use more of their assets to pay for care.
• Analysis by the Institute for Fiscal Studies published today showed that without this amendment, someone needing residential care costing £700 a week would reach the cap after 3 years and 4 months, regardless of their levels of income and assets. With the amendment, someone with that care need who has annual income of £16,000 and assets of £100,000 would take almost 6½ years to reach the cap.
• Under the government’s plans, those with assets between £83,000 and £183,000 would face the biggest loss of protection. It would also affect those living in places like the North-East far more than places like London, where house prices mean average assets are much higher.

The Institute for Fiscal Studies has published research into the impact of the government’s proposed amendment to the social care cap. Does the cap fit? Analysing the government’s proposed amendment to the English social care charging system – Institute for Fiscal Studies – IFS

Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown:

“The government’s quiet tweak to the social care cap will leave families facing horrific bills for years longer than they expect.

Social care reforms were initially welcomed for taking huge strides towards helping people manage the catastrophic cost of care. However, the government’s decision to not include means tested support as counting towards the cap takes away support from those who need it most.

Having to fund the social care cap in its entirety from their own assets means it will take longer for people with low to moderate assets to reach the cap and they will deplete a far larger proportion of their assets in doing so than those who are better off. The analysis in the IFS report demonstrates this with people potentially having to budget for care costs for years longer than they initially thought. These families face enormous financial stress in the coming years as they try to meet these costs.

As it currently stands this amendment also comes as a huge blow to anyone living in areas such as the North-East and Yorkshire who have not had the benefit of the huge house price inflation seen in the South.

The government has sought to soften the blow by saying the more generous means-testing – raising the capital limit under which people receive help from £23,250 to £100,000 – will be the main way of helping people, but this will come as no comfort to those who are struggling to meet care costs and are relying on means-tested support.”