ONS report on self-funding in care homes – “stealth tax on cost of care” – reaction from IFAs and the DHSC

care bill

Scott Gallacher, chartered financial planner at Leicestershire-based independent financial advisers, Rowley Turton: An increasing number of people are having to use their hard-earned savings to pay for their care. Anyone with more than £23,250 in savings, investments or property (apart from their own home in some circumstances) normally has to pay for their care themselves.

“And the government has frozen this £23,250 limit for over ten years. Had they increased this limit in line with inflation, it would now be over £35,000. Hence, today many more people are having to use their savings to pay for their care than previously. In effect, this is a stealth tax on the cost of care.”

Joshua Gerstler, chartered financial planner at Borehamwood-based The Orchard Practice: “It is quite common nowadays for us to include the cost of care in our clients’ financial plans. Sometimes this will come from savings and investments and in other cases it may be paid for via pensions. Often the equity in a client’s home will be used. Our clients often allow about £60,000 per year for this.”

A Department of Health and Social Care spokesperson said to IFA Magazine:

“We are committed to quality care and provision for people in care homes and our white paper sets out an ambitious 10-year vision for adult social care, backed by £5.4 billion.

“This will include £500 million of investment to develop and support the social care workforce over the next three years to boost the sector’s ability to recruit and retain staff, improve learning and development, and better support mental health and wellbeing.”

BACKGROUND INFO provided to us also by the DHSC is as follows:

  • The means tested nature of local authority supported adult social care means that many care home residents are required to fund their own care. Our reforms will cap the cost of care.
  • This is an update to the first comprehensive publication by a government body on the number of self-funders in care homes in England, which was published by ONS in October 2021 using 2019 to 2020 data.
  • The publication uses data that began to be collected by CQC in mid-2019 (but suspended between April 2020 and March 2021) as part of their Provider Information Return process, following requests from DHSC to share some of this information more widely. That process aims to better inform inspectors about the locations that they inspect.
  • The report does not contain information on the fee rates paid by self-funders, but previous research by the CMA (2017) found that self-funder clients paid on average 41% more than local authority funded clients in the same home, often described as a cross subsidy. Recent unpublished analysis of our Capacity Tracker fee survey shows a similar picture. This is potentially reflected in the higher shares of self-funders seen in homes with better quality ratings as described below.
  • To support workforce pressures over winter we provided £462.5 million to local authorities to boost recruitment and support existing care staff, and we ran our national recruitment campaign, Made with Care, from November to March.
  • On 15 February we added care workers to the Health and Care Visa and Shortage Occupation list for a 12-month period until February 2023, enabling these roles to be recruited from overseas.


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