Originally, these reforms were to be part-funded by a 1.25 per cent increase in employee, self-employed and employer national insurance rates, which were to become a separate levy.
This was scrapped in November 2022 due to wider economic issues at that time.
Since then, we have seen further cuts in both employee and self-employed national insurance, so I do accept that the Labour government did inherit a funding issue here.
Dilnot subsequently rejoined the debate, suggesting ways of making up the funding.
While suggestions of increasing the rate of income tax or national insurance, at least for the next five years, would break Labour’s manifesto commitment, a separate levy would not.
Dilnot also suggested dropping the rule that currently exempts those over state pension age from paying national insurance on earnings, although that might discourage some individuals from working longer.
The care cap
Under the Conservatives’ reforms, anyone requiring care either in their own home or on a residential basis was to have eligible personal contributions to care costs, paid after the start date, capped.
The cap was to originally have been £86,000, increasing in line with average earnings growth.
To me a cap is crucial as it means those requiring care for lengthy periods no longer face catastrophic costs wiping out life savings.
It also encourages advance planning – with no cap, some might argue, why save more if that just means you are asked to pay more if needing care?
It would have been for local authorities to decide which costs were eligible, based on what they would be prepared to pay for the care they considered the individual needed.
Individuals would have had the option to pay a top-up for a more expensive service, but these top-ups would not count towards the cap.
Individuals would also have continued to pay for daily living costs, or room and board.
Here, for the purposes of the cap, a national, notional amount of £200 per week in 2021-22 prices was to be set.
The following is a simplification, but let’s say a local authority would pay £900 a week to meet an individual’s needs in a care home.
For the purposes of the cap, £200 would be deemed for daily living costs and the remaining £700 a week paid by the individual would count towards the cap. If an individual chose a more expensive facility charging £1,200 a week, then again it is £700 a week that counts towards the cap.
Means-tested support
The Conservatives were also planning to change means-tested thresholds.
Currently in England, individuals have to pay their full care costs until their assets have dropped below the upper capital limit of £23,250.
