Care capped

The Care Act 2014 has undoubtedly been the biggest reform on how care is paid for since the introduction of the NHS in 1948. It has been the subject of much pomp and the widely heralded cap on care home fees was touted as a landmark reform throughout the act's debate in parliament, reiterated throughout the run up to the recent general election. The introduction of the care cap in April 2016 formed a central tenet of the Conservative party's manifesto in the run up to the 2015 general election.

It was therefore a surprise to many when, not with a bang but a whimper, it was determined that the care cap would be shelved until 2020. The news came by way of a letter from the Minister of State for Community and Social Care, addressed to the Chair of the Local Government Association. The circular referred to balancing the books, the extra time commitment that introducing these changes would take, and the failure of the insurance and finance markets to develop new products to meet the costs of care.

The concept of the care cap was part of the Dilnot Commission's report in to the cost of care, which suggested a cap on the total costs of care somewhere between £25,000 and £50,000, and that the cost of care should be met by the state thereafter. The report proposed £35,000 as an appropriate cap, which was more than doubled by the cap's introduction into legislation.

What many who do not specialise in this area had missed was that the Care Act 2014's cap of £72,000 applied only to the cost of care, as distinct from the residential cost of care. It was broadly anticipated that
it would take the average nursing care resident between three and four years in care, to reach the cap and to therefore start benefitting from it.

While three to four years in care does not seem so great a figure, the 2011 report 'Length of stay in care homes' found that the average length of stay for people admitted to a care home was 801 days; a little over two years and two months. They found that half of residents had died by 462 days in care, and that only 27 per cent of people lived for more than three years. By reference to those figures alone, it seems clear that the cap on care would only apply to a minority of care residents, with the vast majority never reaching the cap's limit.

The Institute and Faculty of Actuaries's response to the government's announcement stated that for those aged 85 today, only 10 per cent would ever reach the cap on care costs, and the average would spend £140,000 on their care placement before reaching it.

It was claimed that the cap would prevent catastrophic care costs from requiring people to sell their homes in order to fund the cost of care. With that protection removed in the middle of complex reforms, where are individuals in need of care left?

Phase one of the Care Act was implemented earlier this year and included reforms to Deferred Payment Agreements (DPA), intended to secure care home fees accrued in excess of the liquid capital the resident has saved. The new style DPA includes extended powers to allow the local authority in question to levy charges for entering into the arrangement, to charge interest on the amounts loaned, and to charge interest on the costs of entering the agreement.

Local authorities are now under a positive obligation to ensure the recoverability of the cost of care advanced, which goes so far as to require them to enter a resident's property to make good required maintenance and repairs, and to roll the cost of the repairs up with the cost of the resident's care. Consequently the average cost of a placement in care is likely to increase, without the counterbalance of a cap to end the care home resident's obligation to pay.

It may be argued that the part implementation of the act leaves the care industry out of balance, with increasing costs on the one side and a failure to implement an end point for those costs on the other. Regardless, the confusion caused by part implementation of key legislation is likely to cause headaches for some time to come.

Leah Steele is a solicitor at Hugh James

She writes the regular vulnerable clients comment in Private Client Adviser