With time of the essence, local government needs political parties ahead of the general election to clearly set out whether Part 2 of the Care Act is part of their vision, and crucially, if they do, how they will achieve it in practice.
Upon its inception a decade ago, the Care Act was described by the then Care Minister Norman Lamb as ‘the most significant reform of care and support in over 60 years’.
Certainly, it was seen back then as a seminal piece of legislation. It placed more emphasis on personalised care, prevention, and integration. It aimed to make it easier for care users and their carers to navigate what some regarded as a confusing and bureaucratic system.
Perhaps most importantly from a user point of view, it set out a national eligibility threshold to make it clear who was eligible for care support.
Certainly, prevention and integration were two critical parts of the reform. Preventing people from entering residential care in the first place not only keeps individuals independent for longer but costs the public purse less. Since Buckinghamshire Council ‘went unitary’ in 2020, we’ve placed a great deal of emphasis on prevention by better linking serves such as housing and public health with adult social care.
However, the Care Act was implemented during a period where government grant funding for councils was going one way, and the demographics were going the other.
Despite the advent of the adult social care precept, ad-hoc social care grants, and a range of innovative approaches from councils, there have been severe limitations on the ability of councils to realise the full ambitions set out in the Care Act.
No more so is this true than when it comes to implementing perhaps the most significant changes contained in the Act; charging reforms. The most eye-catching element of Part 2 of the Act was the intention to introduce a new means-test threshold and cap on care costs, so that more individuals would be protected from facing catastrophic care costs.
The less well known, but no less significant, Section 18(3) of Part 2 would also allow those that pay for, and arrange, their own care (‘self-funders’) to ask councils to arrange services on their behalf, crucially, accessing lower council fee rates.
The principles behind the proposed charging reforms were laudable: no one should face catastrophic care costs, fee structures should be fairer, and self-funders should have more support with their care needs. Nonetheless, the reality is that governments past and present have underestimated the costs of these reforms and the practicalities of implementation.
It has been widely known now for over a decade that local care markets and private providers are effectively cross subsidised by self-funders who pay on average 40 per cent more than councils for the same standard of care. While this cross-subsidy may be inherently unfair, we know that eroding or eliminating it comes with a significant price tag for councils and an impact on the market. In 2015, CCN’s research with LaingBuisson, which was trailblazing at the time, raised serious concerns that Section 18(3) would lead to a significant number of care homes going out of business, and increased costs for councils.
It was for these reasons that both CCN and the Local Government Association reluctantly opposed the introduction of Part 2 in 2016 and the then-government listened to the sector’s concerns and postponed the reforms.
Fast forward to 2021, and the government led by Boris Johnson announced that charging reform would be implemented by October 2023 as part of his government’s reforms. While they learnt from previous mistakes and provided direct government funding to implement a new ‘fair cost of care’ to offset the impacts of Section 18(3), the same challenges persisted.
CCN revisited its research with LaingBuisson, with new modelling showing that an extra £850 million was needed each year to ensure that a new fair cost of care prevented widespread care market failure. Separately, our report with Newton showed that the government had underestimated the combined costs of the cap on care, means test and fee uplift requirements by over £10 billion. Equally importantly, it showed that the workforce requirements needed to undertake tens of thousands of care and financial assessments each year would exacerbate the existing capacity crisis in social care.
Whilst the CCN had a number of constructive meetings with the Department of Health and Social Care in 2022 to outline these concerns and secure an uplift in funding to support implementation, the financial situation for central and local government rapidly deteriorated. CCN research at the time showed that rampant inflation and a surge in post-pandemic demand would more than double the cost of delivering existing services during the same period councils would be implementing these reforms.
The government therefore faced a choice: ask councils to implement underfunded charging reforms while reducing care packages for those needing care the most, or delay the reforms and reinvest earmarked funding to stabilise the system.
Our case was persuasive, and the Chancellor delayed the reforms until October 2025, with £2.9 billion of funding over two years retained for core services.
This difficult but necessary decision by the government undoubtedly gave adult social care services the breathing space it needed. While councils’ financial challenges are more intense than ever, they have used this additional funding to commission thousands of more care packages to meet the needs of our ageing population and, essentially, keep the show on the road.
But with a general election due later this year, and 18 months out from the revised implementation date, the question that arises is: what next?
The decision to proceed with charging reform will be at the top of the in-tray for whoever fills the role of Health and Social Care Secretary in the next government.
But even now, before the election, we need to consider whether this October 2025 timescale is deliverable.
It is unthinkable that an incoming government would repurpose the funding redirected to core services as a result of the delay – meaning they would need to find at the very least an additional £1.7 billion in 2025. It is also vital a new impact assessment is undertaken to ascertain accurate long-term costs and the impact of care providers from Section 18(3).
Moreover, almost all implementation work has been paused by both central and local government, while the challenges of workforce capacity outlined in our Newton report have only intensified.
We recognise the importance of these reforms in Part Two of the Care Act, and we completely understand that they are needed to resolve some of the most unfair parts of the social care system.
But it is equally important that these reforms do not end up making care services worse for those already in receipt of state support.
With time of the essence, local government needs political parties ahead of the general election to clearly set out whether Part 2 of the Care Act is part of their vision, and crucially, if they do, how they will achieve it in practice.
