Predicting the costs of the proposed social care funding reforms: October 2021

Damian Payne

This week’s Budget announcement reminded us of the shake-up in social care funding in England and the many unanswered questions about the level of additional funding required to implement the proposals. For more details on the proposals so far, see our previous article here. All the details of the funding are yet to be published, but below we explore the areas which local authorities may need to consider when estimating these costs.

Changes to upper capital thresholds

At present, only people with less than £23,250 are assessed by the local authority for funding. Individuals whose assets exceed this value may only be known to the council if they have a deferred payment agreement, or if they are close to crossing the current upper savings threshold for funding. There are many factors to consider when estimating this figure. This may include:

  • General level of wealth in the local authority
      More affluent areas will have a higher proportion of self-funders.
  • The ditribution of wealth among individuals
      There will be a wide range of different financial circumstances represented, not every case is the same.
  • Tariff income
      Based on the proposed changes to the tariff income bands, tariff income would be set at £240 a week (if it were kept at the current rate of £1 for every £250) where an individual has £80,000 in savings. This increase could lead to higher charges for clients.

Introduction of the “care cap”

The revised “care cap” could mean that a new cohort of people who were previously ineligible for funding will be entitled to help. Factors to consider include:

  • General level of wealth in the local authority
      More affluent areas will have a higher proportion of self-funders.
  • Average cost of services
      We expect that only the costs of “necessary” care will contribute to the care cap. Will a national “standard rate” be applied for the purpose of the cap?
  • The number of people currently in receipt of eligible care
      Can this be estimated by looking at local provider capacity
  • The funding split between residential costs and care costs in residential placements
      This may potentially be set as a standard figure (in 2015 this was set at £210 per week)
  • Average life expectancy of someone in receipt of care
      Life expectancy rates mean that people may not reach the care cap during their lifetime, which would reduce the funding required by the local authority.
  • Growth Rates
      The changes will be introduced in 2023, but on average it will take a few years for a person to be eligible for funding over and above that already paid by the authority
  • Individuals who do not want to be assessed
      Not everyone will want to tackle the bureaucracy involved in a council assessment and apply for state funding.

Changes to cost of services

As part of the changes, self-funders will also be able to take advantage of the preferred rates offered by providers to local authorities who can bulk buy services. The concern is that providers are already facing higher costs, and the unintended consequence may be an increase the preferred rates offered to local authorities.

Administration costs

Another key question is what it will cost to administer the system. Everyone with assets of less than £100,000 will now need to be financially assessed. Furthermore, anyone entering care, whether funded or not, will need an assessment if they want to take advantage of the “care cap”. Could providers potentially be required to carry out a lightweight assessment based on current care packages to register self-funders? It seems highly likely that more financial assessment officers will be required, and local authorities will need to increase their utilisation of both online and self-service tools.

Next Steps

At OCC, we continue to monitor information as it is made available, to ensure that products are compliant with the new regulations. We have been working with a number of local authorities on the new Insights product pilot (previously known as ContrOCC Bench) to model many of the scenarios discussed. To do this, we have been using data in finance systems combined with publicly available information from bodies such as CQC and ONS.


As well as enabling council access to powerful reporting, OCC can help to alleviate some of the burden of increased assessment requirements through our self-service Online Financial Assessment tool.

If you would like further information on either our Insights product or our Online Financial Assessment tool please either contact your OCC account manager or email us at info@oxfordcc.co.uk.