The options discussed on the previous page offer policymakers choices about the kind of social protection that could be offered – from all care needs to just a portion of them. An important advantage of the capped cost model, however, is that it already lies on the statute book.

The principle of a cap on care costs was included in the 2014 Care Act. This means that social care leaders have a head start in implementing the policy – a part of the policymaking process that too often gets forgotten – and would be able to do so without new legislation.

The capped cost model could also be used flexibly by governments of different ideological hues, based on choices about the balance of responsibility between individuals and the state – as well as more pragmatic decisions about how much cash they are willing to spend.

One approach would be to implement the cap (combined with a more generous means test) at the middle of the range proposed by Dilnot in 2011 (equivalent to £46,000 in today's prices), or at the level proposed by the government in response (equivalent to £78,000 in today's prices). Improvements to the existing social care system and increases in access, would increase the number of people helped by these models and make them more expensive.

An alternative would be to set the cap at £0 – providing everybody with publicly funded care if their needs met nationally agreed eligibility criteria (equivalent to a version of universal and comprehensive social care). This would shift the balance of responsibility from individuals to the state. And it would remove the need for people with eligible needs (and enough means) to pay for their care until they've spent some of their own money. But it would also be more expensive. Another option would be to include a smaller cap than Dilnot suggested – say £10,000 or £25,000.

The table below estimates the cost of implementing a Dilnot-style means test and capped cost model under four scenarios by 2019/20 and 2023/24. These estimates are based on increasing the upper capital threshold from £23,250 to £125,000 (so, a more generous means test) and an individual contribution of up to £13,000 to annual living costs. They set out additional costs compared to the current system if the models were fully implemented in the current year – so do not include extra costs needed to improve quality and access. In practice, there would be a lag in implementing a capped cost or any new funding model, and under a capped cost model, the costs would be low until significant numbers of individuals reach the cap.

As we outlined above, the government could make a capped cost model more generous by reducing individuals' contribution to annual living costs to the level of the full state pension. This would, inevitably, increase costs to the state – for example, adding around £0.7bn in 2019/20 under a £46,000 cap. None of the estimates include any demand increase that could be stimulated by introducing the cap (which are probably more likely the lower the cap).

Additional costs of a Dilnot-style means test and capped cost model

2019/20 and 2023/24

Cap level 2019/20 2023/24
£0 £6.8bn £7.8bn
£10,000 £5.8bn £6.4bn
£25,000 £4.0bn £4.6bn
£46,000 £2.6bn £3.1bn
£78,000 £1.7bn £2.1bn

These estimates illustrate how a capped cost model could be used flexibly by government depending on their values, priorities, and public spending plans. Political values, of course, should hopefully be shaped by public values. In our deliberative research with the public, most people favoured the idea of the state having most responsibility for funding social care. Survey data provide a more mixed picture, with most people (55%) in the 2017 British Social Attitudes survey favouring some sort of shared responsibility for social care costs, and 41% favouring a government funded system paid for by taxes – though survey data on social care should be treated with caution, given many people are unaware of how the system works.

Capping annual or lifetime costs?

Other reform proposals – for example, a Scottish-style model – could also be combined with a cap on care costs to protect people against unaffordable bills. For example, Policy Exchange recently proposed a variant on the Scottish social care model, with a £5,000 annual cap on individual costs (in the form of a co-payment).

If a capped cost model is to be explored by government, a lifetime – not annual – cap would likely do a better job of targeting state funding on those with highest needs. Consider person A with care needs of £4,500 a year for 10 years. Under an annual cap of £5,000, they would receive no additional state support over the decade, footing the entire bill of £45,000. But under a lifetime cap of – say – £25,000, additional state funding would kick in within just over half the time. Compare that to person B, with care costs of £6,000 a year for two years costing a total of £2,000. Under the £5,000 annual cap, the state would contribute to person B's costs in both years, while under a lifetime cap of £25,000, funding would be prioritised for person A, who has much greater lifetime needs, instead.

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