Care Home Fee Cap Cancelled: What This Means for Providers

The government has confirmed that the planned £86,000 lifetime cap on care home fees will not go ahead in October 2025 as previously scheduled. This decision marks the end of a policy that has been delayed multiple times since it was first announced, and it will have significant implications for care providers like Lidder Care, residents, and their families.

What Was the Care Fee Cap?

The care fee cap was designed to limit how much individuals would pay for their personal care over their lifetime. Under the original proposals:

• Personal care costs would be capped at £86,000 per person
• Once someone reached this limit, their local authority would take over responsibility for funding their care
• Daily living costs (accommodation, food, and utilities) would remain the responsibility of the individual, set at around £200 per week
• The cap would only apply to care costs assessed by the local authority as eligible needs

The policy was first announced in 2021 as part of the government’s “Build Back Better” plan, initially scheduled for October 2023, then delayed to October 2025, and now cancelled entirely.

Why Has It Been Cancelled?

The current Labour government, elected in July 2024, has decided not to proceed with the care fee cap. While the government hasn’t provided detailed reasons for the cancellation, several factors likely influenced this decision:

• Cost concerns: The policy would have required significant government funding to support local authorities taking on additional care costs
• Complex implementation: The system would have required extensive administrative changes, including new care accounts and assessment processes
• Limited immediate impact: The cap would only have applied to new care users from October 2025, meaning existing residents wouldn’t have benefited

What This Means for Care Providers

Funding Model Remains Unchanged

With the cap cancelled, care providers will continue operating under the current funding system:

• Self-funders will continue to pay the full cost of their care
• Local authority-funded residents will be supported under existing means-testing arrangements
• Top-up fees from families will remain an important revenue stream for many providers

No New Administrative Burden

Care providers can breathe a sigh of relief that they won’t need to:

• Implement new care account systems to track residents’ progress towards the cap
• Separate personal care costs from daily living costs in their billing
• Manage the complex transition when residents reach the £86,000 threshold

Pricing Strategies Can Continue

Without the cap, providers can maintain their current approach to:

• Setting fees based on local market conditions
• Offering different room types and service levels
• Negotiating with local authorities and families on funding arrangements

Impact on Residents and Families

Financial Planning Remains Uncertain

For families planning for care costs, the cancellation means:

• No limit on care expenses: Individuals may still face unlimited care costs over their lifetime
• Continued reliance on means-testing: The current system where people with assets over £23,250 pay for their own care remains in place
• Property implications: Families will still need to consider whether the family home might need to be sold to fund care

Current Charging Rules Still Apply

The government has confirmed that existing charging arrangements continue:

• Upper capital limit: £23,250 (unchanged for 2025-26)
• Lower capital limit: £14,250 (unchanged for 2025-26)
• Personal expenses allowance: Increasing to £30.65 per week in 2025-26

What’s Next for Care Funding?

The Casey Commission

Instead of the care fee cap, the government has established the Casey Commission, led by Baroness Louise Casey, to develop long-term reform plans:

• Phase 1: Will report in 2026 with medium-term recommendations for a National Care Service
• Phase 2: Will report by 2028 with long-term transformation plans
• Cross-party approach: The commission aims to build consensus across political parties

Immediate Support Measures

While waiting for long-term reform, the government has announced:

• £3.7 billion additional funding for social care authorities in 2025-26
• Increased Disabled Facilities Grant with an extra £86 million
• Fair Pay Agreement development for care workers

Preparing for the Future

For Care Providers

• Financial planning: Continue with current funding models but stay alert to future policy changes
• Quality focus: With no cap to complicate pricing, maintain focus on providing high-quality care
• Workforce development: Take advantage of new training funding and career pathway initiatives

For Families

• Seek advice: Continue to get professional financial advice about care funding options
• Consider insurance: Explore care insurance products, though these remain limited in the UK
• Local authority support: Understand what support may be available from local authorities

Looking Ahead

The cancellation of the care fee cap represents a significant policy shift, but it’s not the end of the story for care funding reform. The Casey Commission’s work over the next few years will be crucial in shaping the future of how we pay for care in the UK.

For care providers, this decision removes a layer of complexity that would have required significant administrative changes. However, it also means that the fundamental challenges of care funding – including the sustainability of the current system and the financial burden on families – remain unresolved.

The focus now shifts to the commission’s work and the development of a National Care Service. Care providers should stay engaged with these developments, as the decisions made over the next few years will shape the industry for decades to come.

We’re Here to Help

At Lidder Care, we believe that everyone deserves a place where they feel safe, respected and truly cared for. Our homes are built on empathy, professionalism, and personal attention. Whether you’re just starting your search or are ready to visit, we’re always here for a chat, a tour, or to simply answer your questions. Contact our friendly team today

Let us help you find a place your loved one can truly call home.