In psychology, ‘anchoring’ is the human tendency for decisions to be influenced by a particular reference point or ‘anchor’. See an item of clothing on sale for £20, reduced from £40, and you’ll think you’re getting a bargain: the full price acts as the reference point (even if the item is, in itself, worth only a tenner).
When looking at Government’s social care funding reform in England, what’s the right ‘anchor’ to have in mind? The Government would like people to have the current system as its reference point because the reform proposals are an improvement on it. They involve two essential elements: a more generous means test and a cap on care costs. The means test reforms will increase the lower capital threshold to £20,000 and the upper one to £100,000 and, as a result from 2023-24, another 40,000-50,000 people will be receiving some amount of public support with their care costs at any one time.
The cap element of the reform will limit an individual’s lifetime care costs to £86,000 (there is, admittedly, a lot of fine print beneath that statement that we don’t have space for here), though they will still need to pay living expenses if living in a care home – a Daily Living Cost – of £200 a week. The Government estimates that within 10 years, around 70,000 people will gain financially from this cap.
But what if your reference point – your ‘anchor’ – is not the current system but the Dilnot Commission and subsequent measures in the 2014 Care Act, which were based on Dilnot recommendations but never implemented? The House of Commons Treasury Committee put out its own assessment of the reforms in January.
When you compare them to the Dilnot Commission/Care Act proposals, it says, they are more generous in some ways (the Daily Living Cost is better, for one) but far less generous in others: the level of the cap is higher than the level proposed by Dilnot, the £100k upper threshold is lower than it would have been if inflation was fully taken into account, and – a critical technicality – the local authority contribution towards care costs will no longer count towards the £86,000 figure. The effect of this (documented in detail by the Institute for Fiscal Studies) is that people with assets between £20,000 and £106,000 will pay far more towards their care than they would have done under the Dilnot proposals.
This, says the Committee in very Parliamentary language, is ‘regrettable’. Many people, including The King’s Fund, think the same, and want the change reversed.
Of course, much of this detail goes over people’s heads (which is what you’d expect from a cap, after all). Most people won’t read the Government’s impact assessment or the Treasury Committee report. Their reference point is more likely to be a general sense of a social care system that allows themselves or the people they love to maintain a decent quality of life and which doesn’t personally cost them a fortune. We know that the Government’s reforms, however generous they end up being, are at best only a first step towards that system, and that basic problems like funding and staffing are still not resolved. That helps explain why in a recent poll only 7% of people thought the Government had the right policy on adult social care.
So how good are the Government’s funding reforms? It depends heavily on your reference point.