Labour never loved the idea of a cap on care costs – now it must decide what to do instead

The decision to cancel the cap on social care costs, announced by Rachel Reeves on 29 July, is a case of a government abandoning a policy it never loved and to which it was never really committed.  

The policy was created by the Conservative/Lib Dem coalition government in 2014 but implementation was repeatedly postponed by successive governments, most recently until October 2025. Implementation of the policy was pointedly not included in the Labour manifesto in 2024, and got no more than lukewarm support during the election campaign by the then Shadow Secretary of State for Health and Social Care, Wes Streeting.  

So for the incoming government, with an apparent £22 billion financial black hole to fill, the decision to jettison the policy’s initial £1 billion cost in 2025/26 cannot have taken long to reach.  

So for the incoming government, with an apparent £22 billion financial black hole to fill, the decision to jettison the policy’s initial £1 billion cost in 2025/26 cannot have taken long to reach.

The question is: what now? The government has said it will ‘grip’ the crisis in social care and doing that means tackling the fundamental issue – the widening gap between the population’s need for support and the availability of publicly funded care.

In England access to social care support is means tested, unlike the NHS which is free when people need it. The difference is huge: no one is asked about their house value if they need medical treatment for cancer, yet if they need social care because of dementia that is exactly what happens. This level of means testing also sets England apart from many other progressive, developed countries such as Germany, Japan and Denmark. 

Instead, in England, only those with few assets – low levels of savings and, often, no house – will get publicly funded support (even then, they will have to contribute often large amounts towards their care costs). The rest will either have to go without care, rely on their family and friends, or pay for care themselves. Some of those who do pay for care will end up with huge care bills – one in seven face costs of £100,000.  

Tackling this unfairness is the key reform required but sometimes its importance gets overlooked because the current publicly funded system is already creaking at the seams. As a result, care staff are underpaid so there are not enough of them, quality is variable, and there is a postcode lottery between local authorities as to who is able to access the care they need. But just providing more funding for the current unfair system is not enough: the fundamental need is to make the system fairer, with more people able to access care that is, at least in part, funded by the state. This would be the marker of a more decent society.  

The plans that Labour has now abandoned would have tackled this in two ways. They would have made the means test more generous so that more people would have been entitled to some support from the state. However, many people would still have had to pay for themselves so the reforms would also have set a limit – or ‘cap’ – on the amount someone would pay for their care costs in their lifetime. After that, the state would step in and take over.  

These plans were not particularly generous. They would not have made access to social care as open as the NHS. People would still have been asked about their house value if they needed care. But they would have made a difference.  

We could easily be back on the not-so-merry-go-round that is adult social care policy again.

Instead, the government is left with no plan. It has mooted the idea of a cross-party royal commission to decide what to do, but this is likely to take at least two years to report. Nor is there any guarantee that the government would accept whatever recommendations it made. We could easily be back on the not-so-merry-go-round that is adult social care policy again.  

The current social care system is not fit for purpose. Ministers have a small window of opportunity to reform the sector and ensure that more people can access free or subsidised care when they need it. They should urgently decide how to progress reform at speed. Otherwise, families and people who draw on care will again be left in uncertainty about when – and indeed whether – they can expect to see a genuinely reformed social care system.