Rest in peace, Dilnot reforms. These complex plans, aimed to make the cost of social care more equitable, have staggered on for over ten years. They were pronounced dead shortly after 3pm on Monday by Chancellor Rachel Reeves during a grim statement in the House of Commons in which she surveyed the “unforgivable” financial inheritance left to her party.
In their short history, these reforms have never been given adequate fiscal headroom, and with the government facing a £22bn overspend there certainly isn’t much space for them now. The plans were first developed by the economist, Andrew Dilnot in 2011 during the early years of the coalition. They included, as their headline policy, an £86,000 lifetime cap on care costs. This was aimed at preventing families from having to sell their homes to fund the care of elderly relatives. After hitting the cap, residents’ costs would then be met by their local authority instead of, as is the case now, coming from their own pocket.
The first and only attempt to implement the reforms began in 2021, when Boris Johnson declared his plan to “fix the crisis in social care”. In typical Johnson fashion, it was unclear that the then prime minister had actually grasped the scale of such an undertaking. His attempt at overseeing the implementation of Dilnot was undercooked and lacking in detail.
Johnson’s plans pivoted around the health and social care levy, a 1.25 per cent increase in national insurance aimed at increasing funding for social care by £5.4bn over three years. The £86,000 cap on costs was then due to come in, in 2023. The levy, however, made it no further than the aftermath of Liz Truss’s disastrous mini budget when it was the only one of Kwasi Kwarteng’s tax cuts to survive Jeremy Hunt’s re-centring at the end of 2022. The reforms were then pushed back to 2025. Now they are on hold indefinitely.
That reforming our outdated and bureaucratic social care system has once again been kicked into the long grass is unsurprising. But it is deeply worrying too. Social care is quickly becoming a financial behemoth for councils and residents up and down the country, eating into budgets and sucking up resources. Since 2014, social care services have gone from subsuming 57 per cent of local authority budgets to 65 per cent in 2024.
Because such a large part of council budgets are taken up by a single service, there is a dwindling sum of money left for anything else including more preventative measures. A vicious circle ensues: without early interventions, elderly people become unwell more quickly and therefore need more intensive – and more expensive – care.
The Dilnot reforms did not specifically deal with reforming the cost of care for councils. In fact part of the reason they were so heavily delayed, and eventually cancelled, was the cost burden they would place on local authorities (£30bn over nine years according to the County Councils Network). But their cancellation speaks to a wider truth around government attitudes – from whichever party – towards answering the question of how we fund and operate social care.
The government will need to make some tough political choices. Either taxes must rise in a similar vein to the social care levy, local authorities must be given new ways of raising revenue, or we continue as we currently are with an expectation that those with assets must forfeit them later in life should they need ongoing care.
Ahead of the election, Labour clearly spent some time thinking about how it might do this. One idea is the creation of a national care service, a manifesto pledge first proposed by Gordon Brown towards the end of his premiership in 2010. At the launch of a report by the Fabian Society which outlined a roadmap for the service, Wes Streeting, then shadow health and social care secretary, described the service as “unfinished business” but he was clear that Labour would only pledge to do “what they could actually deliver” in the first year of a Labour government. But with the public coffers now facing a £22bn in-year overspend, and with departments under strict instructions to deliver 2 per cent worth of savings, a new healthcare entity on par with the NHS looks unlikely.
Regardless, someone is going to have to come up with an answer to this perennially stubborn question. The UK’s aging population is showing no sign of slowing down. By kicking Dilnot to the curb, the government have shown a whiff of deflection on this issue. Unfortunately for them, this is a crisis with no chance of dissipating any time soon.
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