Cap on care costs: significant risks around plan to deliver delayed reform by 2025, says watchdog

There are “significant risks” around the government’s capacity to deliver its already delayed plan to introduce a cap on care costs by October 2025, the public spending watchdog has warned.

The National Audit Office (NAO) said work needed to start soon, backed by more resource, to deliver the cap and a more generous means-test for care by the revised target date, two years later than originally planned.

The NAO issued the message in a report assessing the Department of Health and Social Care’s (DHSC) ability to deliver on its wider adult social care system reforms.

Its study came a year after the government announced a two-year delay to its plans to implement the charging reforms in October 2023, in order to reroute funding from the scheme to tackle mounting cost pressures in adult social care.

That followed widespread concerns from council bodies that they would not have been able to deliver on the reforms in 2023, particularly because of social worker shortages. 

‘A lot to do’ to implement cap by 2025

Though the NAO did not assess the DHSC’s readiness to implement the charging reforms in 2025, it said both councils and local authorities had “a lot to do” for this to be achieved.

Stakeholders told it that preparing local authorities for charging reform needed to have started in summer of this year in order to meet the October 2025 target; however, this has not happened.

A DHSC internal review on charging reform concluded it had struggled to secure the necessary expertise and capability to deliver on the project.

The same review found that the DHSC had worked well with the six trailblazer councils selected to test the reforms. But it concluded that it could have worked more closely with local authorities and the process could have benefited from NHS input.

More resource needed to restart reform process

The watchdog found that the department had disbanded the programme board responsible for overseeing the reform.

Though the DHSC told the NAO that it had “left charging reform in a state where work could be easily restarted”, the watchdog said restarting the work would add to resourcing pressures, increasing workload for the department and local authorities.

This is in a context in which councils and the wider sector must also implement the DHSC’s other reforms to the social care system.

These include improving workforce training and skills, accelerating providers’ uptake of digital social care records, increasing the number of housing adaptations, boosting carer support and introducing Care Quality Commission assessments of councils.

The NAO said the department needed to set out a costed plan to the sector for implementing charging reform from October 2025, incorporating lessons learnt so far.

Many more social workers needed

The cap and associated changes would require councils to recruit an estimated 4,300 additional social workers in the absence of operational changes, because of the need to carry out 105,000 extra annual assessments, found a 2022 report by the County Councils Network (CCN) and consultancy Newton.

To address this, the DHSC had planned to invest in new routes into social work. But it ditched these plans earlier this year.

Existing workforce shortages

As the NAO referenced, the DHSC is funding work by councils to digitise and streamline care assessments, including by having more carried out by non-social work staff.

The watchdog said this could reduce the number of social workers needed to carry out assessments, a scenario that has triggered concerns from the British Association of Social Workers that the role of social workers would be diluted.

However, it is questionable that this would be sufficient to address the charging reform’s workforce requirements given already significant workforce shortages and demand pressures in adult social care.

As of September 2022, one in social worker nine posts in council adults’ services were vacant in local authorities, and councils are also facing significant waiting lists for care and assessments.

As well as the need to expand the workforce to implement the charging reforms in 2025, they also require IT investment to change case management systems in line with new financial assessment procedures and to enable care accounts that track people’s progress towards the cap.

Though the target implementation date is now just under two years away, councils would likely have to start carrying out early assessments of people who want to be considered for the cap or more generous means-test six months earlier, in April 2025.

This means they would need to have systems – and the requisite workforce – in place by then. There may also need to be a second group of authorities testing the reforms, who would need to start work next year.

Uncertainty over election impact

The plan is also complicated by the next general election, which must take place by January 2025 and which the Conservatives are widely expected to lose.

Labour has indicated that it would introduce a “long-term plan for reform of adult social care” that would lead to a “national care service” (source: Labour List). But it is not clear whether this would include the government’s proposed charging reform or when an incoming Labour administration would seek to implement it.

A further issue is that the DHSC also expects councils, as part of the reforms, to move towards paying providers a ‘fair cost of care’, to reduce the need for care homes to charge self-funders extra in order to subsidise below-cost fees from councils.

This is designed to ensure self-funders’ progress towards the cap – which is measured by what their council would have spent on their personal care had they been meeting their needs – reflects what they actually spend themselves.

‘Fair cost of care’ plan

As part of its postponement of the reforms, the DHSC reduced planned funding to councils to implement the fair cost of care by £0.9bn, money that was recycled into day-to-day funding for social care.

However, the fair cost of care remains DHSC policy, with councils retaining £162m a year for this purpose up to 2024-25, which they must use on increasing provider fee rates.

An assessment by councils – ordered by the DHSC – found that it would cost £1.8bn to implement a fair cost of care because fees were currently too low.

However, the NAO said the department believed this was an overestimate, in the light of concerns over the accuracy, robustness and consistency of the data submitted.

‘Intractable political challenge’

National Audit Office head Gareth Davies said: “Adult social care reform has been an intractable political challenge for decades. Government has set out its ambition to meet this challenge and now needs to demonstrate how it is delivering on these plans.

“If government is to successfully reform adult social care, it will need to manage some significant risks, including its own capacity and that of local government to resume charging reform activity alongside system reform.

“To maximise its chances of succeeding, government will need to ensure it understands the impact of its ambitions on local authorities and other stakeholders and establish a costed plan which ensures delivery of its long-term goals.”

Charging reform ‘cannot be delivered on shoestring’

Martin Tett, adult social care spokesperson for the County Councils Network, said: “Last year, the County Councils Network (CCN) highlighted that it would be impossible to implement the government’s proposed charging reforms in social care without making services worse due to extreme financial pressures, and the government took the tough but necessary decision to defer them.

“We recognise that there is a clear rationale for introducing these charging reforms, but they cannot be delivered on a shoestring as this National Audit Office report shows.

“Previous CCN research has shown their costs could be a minimum of £10bn higher [over a decade] than estimated and deepen the workforce crisis in social care. The next government must ensure that these reforms do not fall at the first hurdle by ensuring there is enough resource and workforce capacity in the social care system.”

DHSC ‘remains committed to social care reform’

The DHSC did not address the NAO’s points about charging reform, responding instead to the watchdog’s critique of its wider system reform plan, which covered the bulk of last week’s report.

A DHSC spokesperson said: “We remain committed to reform and are investing up to £700m over this year and next to make major improvements to the adult social care system. This includes £42.6m to support innovation in care and increasing the disabled facilities grant by £50m.

“Additionally, we have made up to £8.1bn available to help local authorities tackle waiting lists, low fee rates, and workforce pressures, £570m of which will help local authorities improve adult social care provision, in particular by boosting the workforce.”