This report, prepared by the LSE Care Policy and Evaluation Centre for the Joseph Rowntree Foundation, examines how England’s long-term care charging system distributes costs among older people, local authorities and the NHS. Using linked simulation models, it assesses how care costs are divided between individuals, local authorities and the NHS, with particular attention to whether the system is progressive. The analysis finds that homeownership and partnership status are crucial to understanding people’s exposure to costs. Although non-homeowners generally have lower incomes and savings, many low-income older people own their homes and may therefore be excluded from state support for care-home costs. Even people who qualify for local authority funding can face substantial contributions, while the capital thresholds create sharp cut-off points that make wealth more influential than income in determining who pays.
In 2023, total public and private expenditure on long-term care for older people was estimated at £27.7 billion. Individuals accounted for 47% of this through self-funding and charges for local authority-supported care, while public expenditure accounted for 53%. Private contributions represented a greater share of residential care spending than community care spending. The report also finds that the value of a person’s home has a much stronger effect on funding for care homes, where it may be included in the means test, than for community care, where it is disregarded. It further models reforms previously planned but not implemented, combining higher capital limits with an £86,000 lifetime cap on eligible care costs. Together, these reforms are projected to increase net public expenditure by £4.3 billion in 2033 and £6.3 billion in 2043, in 2023 prices.
Although the reforms would generally provide greater benefits to people with more income or wealth, they would also deliver substantial gains to some unpartnered, low-income homeowners with modest housing wealth.
The findings underline the importance of considering income, savings, housing wealth, homeownership and partnership status together when designing a fairer long-term care funding system.