Labour to scrap cap on Care Fees

This week, the new Chancellor, Rachel Reeves, announced that Labour would be scrapping the planned cap on Care Fees.

On Monday, Reeves announced a series of spending cuts, which she argued were a result of the £21.9bn Government overspend hidden by the Conservatives when they were in government. These involved scrapping the planned reforms to adult social care in England that were due to come into effect in October 2025, but for which funding had yet to be allocated.

Sir Andrew Dilnot, the man who originally authored the proposals back in 2011, said that this was yet another example of social care “being given too little attention, being ignored, being tossed aside. We’ve failed another generation of families,” he told the BBC. 

Defending her cuts, the Chancellor said: “There are a lot of things this new Labour Government would like to do but unless you can say where the money is going to come from you can't do them."

What this means in real terms

The social care plan would have introduced an £86,000 cap on the amount an older or disabled person would have to pay towards their support at home or in care homes from next October.

Once individuals with significant care needs have spent £86,000 on their care, local authorities would cover any additional costs.
The asset limit for receiving partial council support before reaching this cap would be raised, allowing those with up to £100,000 in assets to qualify, compared to the current limit of £23,250.

The care system is facing increasing demand from an ageing population and because people are living longer with more complex conditions.

David Sturrock, Senior Research Economist at the Institute for Fiscal Studies (IFS), said:
“These reforms would have capped the costs people have to pay towards their care over their lifetime, and increased the generosity of means-tests that determine who qualifies for support with care costs from local councils (for those yet to reach the cap). The decision not to go ahead with this expansion of the welfare state will save £1 billion next financial year, and around £4–5 billion a year by the end of the parliament”.

If you’re interested in how to manage your finances to ensure the best possible wealth outcomes in later life for you and your family, we can help. Give us a call on 0333 323 9065 or book a free non-committal initial consultation with a member of our team to find out more.

Arrange your free initial consultation

This article is intended for general information only, it does not constitute individual advice and should not be used to inform financial decisions.