Councils urged to share feedback on distribution of funding to support adult social care charging reform

The Department of Health and Social Care (DHSC) is seeking views from professionals on the distribution of funding to support the reform of the adult social care charging system in 2023 to 2024.

Below, AT Today has provided an overview of the adult social care charging reforms in England, what the consultation is about, and DHSC’s funding distribution proposals.

Background information

The UK Government is introducing a new adult social care charging framework from October 2023, which was announced in September 2021.

As part of the major social care reforms, the government will introduce a cap of £86,000 in lifetime care costs. This applies to everyone universally including both new entrants to the social care system and existing users, without exemption. Costs accrued before October 2023 will not count towards the cap.

Anyone with assets between £20,000 and £100,000 will be expected to contribute to the cost of their care but will also receive state support, which will be means tested.

The new upper capital limit (UCL) £100,000 limit will replace the current limit of £23,250, with the idea that more people will be eligible for state support. However, the lower capital limit (LCL) – the threshold below which people will not have to pay anything for their care from their assets – will increase to £20,000 from £14,250.

The cap will not cover the daily living costs – such as rent, food, and utility bills – for people in care homes, and people will remain responsible for their daily living costs throughout their care journey, including after they reach the cap. These costs will be set at a national, notional amount of £200 per week.

For each person with eligible needs, the local authority must provide either a personal budget, where the local authority is going to meet the person’s needs, or an independent personal budget (IPB), where the individual arranges their own care.

Further details about personal budgets and IPBs can be found here.

About the consultation

The new open consultation – ‘Distribution of funding to support the reform of the adult social care charging system in 2023 to 2024’ – seeks views on proposals for distributing funding to support the first year of delivery of adult social care charging reforms in 2023 to 2024. There are proposals for distributing funding for needs and financial assessments; the extension to the means test; and the cap on care costs.

Funding distribution proposals

Means testing

For the extension of the means test, i.e. raising the upper and lower capital limits, the government recognises that the new adult social care charging framework will extend the means test so that more people become eligible for local authority support with their care costs.

DHSC estimates the costs of these changes at £490 million in 2023 to 2024. This includes £355 million for costs associated with extending the means test for people aged 65 or over, and £135 million for costs associated with extending the means test for adults aged under 65.

The proposed means test extension funding formula considers a ‘relative need’ adjustment for local authority funding allocations, such as for Attendance Allowance claimants, older people with significantly limiting conditions, and Pension Credit claimants.

Care cost cap

For the new £86,000 care cost cap, only a small number of people, predominantly aged under 65, with particularly acute care needs are expected to reach the cap in 2023 to 2024, according to DHSC, with an estimated cost of £35 million.

DHSC says it will distribute the estimated costs in 2023 to 2024. However, due to the relatively small costs and lack of robust data, it is not currently introducing a new formula for the costs to local authorities of paying for care once a person reaches the cap in 2023 to 2024.

Implementation and additional assessments

As more people will require assessments for social care under the new charging system from October 2023, including current self-funders, DHSC recognises that this will create additional workload for local authorities.

To help manage the overall demand for assessments, DHSC recommends that local authorities conduct these needs and financial assessments of self-funders from April 2023 onwards – six months prior to the October 2023 implementation date.

The government estimates a requirement of £247 million in funding to local authorities in financial year 2023 to 2024 to cover the costs of conducting the additional assessments generated through the introduction of reforms.

DHSC is proposing three options for distributing implementation and assessments funding in 2023 to 2024, which can be read in full on the consultation document.

Developing the distribution formulae

DHSC drew extensively on the external expertise of researchers in the Adult Social Care Research Unit (ASCRU) at the Personal Social Services Research Unit (PSSRU) at the University of Kent to help develop the distribution formulae.

These updates were completed in June 2022, and ASCRU-PSSRU published its report, ‘Relative need formula allocation of additional funding to local authorities to meet social care charging reforms’, on 8 August 2022.

ASCRU-PSSRU’s updated model for the assessment and extension to the means test formulae have been specifically designed to predict the relative size of the new public expenditure required for the extension to the means test, and consequent implementation and assessment costs.

Alongside the consultation, DHSC published a technical guide explaining the distribution formulae and data sources used for the allocations in the consultation.

How to respond to the consultation

This consultation closes at 11.45pm on 23 September 2022.

Respond online here.