What is the care cap?

The care cap was announced in 2021 to help manage care home costs

The life-time cap on care meant no one would have to pay more than £86,000 in England for their personal care. The policy was going to be introduced in October 2023 but the Conservative government pushed it back to October 2025.

The new Labour government had said it would still introduce the care cap in October 2025.

On 29 July, Chancellor Rachel Reeves announced the care cap was being scrapped to help tackle a spending ‘black hole’ inherited from the Conservative government. She said scrapping the care cap would save £1bn by the end of next year.

Sir Andrew Dilnot who proposed the care cap back in 2011 called the decision a “tragedy” and “unbelievably disappointing” for families.

The County Councils Network (CCN) had called for a delay on its introduction saying the reforms, which were set to cost £30bn over the next decade, were unfunded, as there was no existing funding set aside to cover the cap.

The care cap was going to apply to both residential care and home care. It was aimed at giving individuals financial protection from paying care costs on an ongoing basis for the rest of their lives.

Reason for the care cap

The care cap was designed to put a limit on the amount people have to pay towards their personal care. The reason behind it was to prevent people having to sell their houses to pay for their social care.

Many people assumed their care costs would dramatically drop due to the care cap. However it would have only covered personal care not accommodation costs and living expenses in a care home.

Key features of the care cap

1. Financial Limit: The care cap was to be set at £86,000. So once costs for personal care went over £86,000, the local authority would take over responsibility for funding personal care for the whole of that person’s lifetime.
2. Eligibility: The lower and capital capital thresholds were going to change once the care cap was introduced. Currently the lower limit is £14,250 and the upper limit is £23,250. If the care cap had gone ahead, anyone with less than £20,000 would have had all of their care costs paid for by their local authority. If a person had over £100,000 and did not qualify for NHS Continuing Healthcare they would have been expected to fund all of their care home costs. If they had between £20,000 and £100,000 they would have to fund a proportion of the costs.
3. Care Accounts: Each person that was eligible for the care cap would have a care account which would track their spending on care. The person’s local council would be in charge of the care account. This account would ensure people know how much they have spent towards the cap. If the person moved to another county or London borough, their care account would move with them. Every six months, the council would inform you how much you have spent towards your care. If you were likely to reach the care cap within the next 12 months, the council would start to work with you to take over funding your care and support.

How would it have worked?

When a person starts needing extra care and support, the plan was for their local authority to carry out a care needs assessment. This would look at their care needs as well as their financial status.

Depending on eligibility, the council would set up a care account which would track how much you are spending on your care costs.

Once your care account reached £86,000, the council would step in and start paying for your personal care. You would need to carry on paying for daily living costs such as accommodation and food, etc.

Cost of implementing the care cap

Implementing the care cap in England was estimated by Newton to cost £30bn over the next decade. It was also thought that the rural areas would be most hit by the care cap as these would have a higher density of older people.