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1 1 Progressive Title: Social Care Charging Reform impact Assessment IA No: 9583 RPC Reference No: RPC-DHSC-5133(1) Lead department or agency: Department of Health and Social Care Other departments or agencies: N/A impact Assessment (IA) Date: 05/01/2022 Stage: Development/Options Source of intervention: Domestic Type of measure: Primary legislation Contact for enquiries: Summary : Intervention & Options RPC Opinion: Not Applicable Cost of Preferred (or more likely) Option (in 2019/20 prices) Total Net Present Social Value Business Net Present Value Net cost to business per year Business impact Target Status Not a regulatory provision billion N/A N/A What is the problem under consideration?

2 Why is government action or intervention necessary? Currently individuals face the risk of unpredictable and unlimited social care costs - one in seven individuals over 65 will face care costs above 100,000 and roughly one in ten individuals will face care costs above 120,000 over their lifetime. Most people are unable to protect themselves against these risks as affordable financial products are unavailable, which impacts their wellbeing and represents a market failure. Government intervention is therefore required to protect people from the risk of unlimited care costs. What are the policy objectives of the action or intervention and the intended effects? The primary objective of the policy is to provide people with financial protection from unlimited care costs and, as a result, give them the peace of mind from knowing that they do not face unlimited care costs.

3 The reforms also aim to increase the protection of those with lower wealth and incomes, expanding eligibility for means tested support by increasing the upper capital limit (UCL). Secondary objectives of the reforms include encouraging people to take responsibility for planning and preparing for their care needs in later life, and contributing to wider objectives of the care and support system, as set out in the government s white paper People at the Heart of Care, including supporting sustainable care markets and fairness in terms of rates paid by self-funders and those who fall under the means-test. What policy options have been considered, including any alternatives to regulation?

4 Please justify preferred option (further details in Evidence Base) Extensive policy options were considered by the Commission on Funding Care and Support (2011). The then Government accepted the principles of their recommendation of a cap on care costs in July 2012. The analysis included within this impact assessment focuses on a new charging reform policy, as announced in September 2021, with a cap on the amount people will have to spend on their personal care and an extended means test. The policy will be reviewed after 5 years as per Section 71(1) of the Care Act 2014. Review Date: October 2028 Is this measure likely to impact on international trade and investment? No Are any of these organisations in scope?

5 Micro Yes Small Yes Medium Yes Large Yes What is the CO2 equivalent change in greenhouse gas emissions? N/A (Million tonnes CO2 equivalent) Traded: N/A Non-traded: N/A I have read the impact Assessment and I am satisfied that, given the available evidence, it represents a reasonable view of the likely costs, benefits and impact of the leading options. Signed by the responsible Minister: Date: 04/01/2022 2 Summary : Analysis & Evidence Policy Option 1 (Do nothing) Description: FULL ECONOMIC ASSESSMENT Price Base PV Base Time Net Benefit (Present Value (PV)) ( m) n/a 2021-22 2020 10 years Low: n/a High: n/a Best Estimate: n/a COSTS ( m) Total Transition (Constant Price) Years Average Annual (excl.)

6 Transition) (Constant Price) Total Cost (Present Value) Low Optional Optional Optional High Optional Optional Optional Best Estimate n/a n/a n/a Description and scale of key monetised costs by main affected groups There are no costs or benefits associated with this option. This is the baseline against which all other options are appraised. Other key non-monetised costs by main affected groups BENEFITS ( m) Total Transition (Constant Price) Years Average Annual (excl. Transition) (Constant Price) Total Benefit (Present Value) Low Low Low Low High High High High Best Estimate n/a n/a n/a Description and scale of key monetised benefits by main affected groups There are no costs or benefits associated with this option.

7 This is the baseline against which all other options are appraised. Other key non-monetised benefits by main affected groups Key assumptions/sensitivities/risks Di N/A BUSINESS ASSESSMENT (Option 1) Direct impact on business (Equivalent Annual) m: Score for Business impact Target (qualifying provisions only) m: N/A Costs: N/A Benefits: N/A Net: N/A 3 Summary : Analysis & Evidence Policy Option 2 (Preferred) Description: FULL ECONOMIC ASSESSMENT Price Base Year 2021-22 PV Base Year 2020 Time Period 10 years Net Benefit (Present Value (PV)) ( bn) Low: Optional High: Optional Best Estimate.

8 COSTS ( bn) Total Transition (Constant Price) Years Average Annual (excl. Transition) (Constant Price) Total Cost (Present Value) Low Optional Optional Optional High Optional Optional Optional Best Estimate billion billion billion Description and scale of key monetised costs by main affected groups All the costs listed below fall upon the government. Costs of charging reform for all adults (Net Present Value billion). Cost of implementation of reform and additional costs for trailblazers (Net Present Value billion). Indicative costs to local authorities from moving towards a Fair Cost of Care (N et Present Value of ). Other key non-monetised costs by main affected groups Familiarisation costs to businesses such as the time and administrative costs involved in understanding changes to the charging system and moving local authorities towards a Fair Cost of Care.

9 BENEFITS( bn) Total Transition (Constant Price) Years Average Annual (excl. Transition) (Constant Price) Total Benefit (Present Value) Low Optional Optional Optional High Optional Optional Optional Best Estimate 0 billion billion 4 Description and scale of key monetised benefits by main affected groups Financial benefits to all adults receiving additional support (Net Present Value billion). The costs to local authorities from moving towards a Fair Cost of Care results in a transfer to providers via higher fee rates resulting in a benefit of having more funding to enable Section 18(3) of the are Act (Net Present Value ).

10 Financial benefits to government due to a reduction in benefits allowances payable (Net Present Value billion) as some benefits, such as Attendance Allowance, are only available when not receiving state support. Peace of mind to everyone from knowing that they will not face unlimited care costs (Net Present Value billion). Other key non-monetised benefits by main affected groups People planning and preparing for their care and support needs in later life. Space for financial services products to emerge onto the market that enable people to plan/prepare and further pool risk. Wider benefits from supporting other objectives for the care and support system including supporting preventative services and the provision of information and advice.