Labour scraps care cap and winter fuel payments to plug £22 billion public overspend
Chancellor Rachel Reeves has announced a string of welfare and social care cuts which the Labour administration has blamed on the legacy of the previous government.
The chancellor said that to plug a £22 billion black hole in public spending "covered up" by the Conservatives, she has had to slash winter fuel payments for ten million pensioners with payments now only going to those on pension credit.
Also controversially ditched is a long-awaited cap on care charges for older people in England - which critics say will put many vulnerable people at risk.
In the same week, Reeves announced a 22 per cent inflation-busting pay rise for junior doctors. She also pressed pause on plans for 40 new hospitals by 2030.
Reeves justified her decisions by saying: “If we cannot afford it, we cannot do it", adding that the winter fuel payments move was "not a decision I wanted to make, nor is it the one that I expected to make, but these are the necessary and urgent decisions that I must make."
She told MPs in a Commons statement: “Upon my arrival at the Treasury three weeks ago, it became clear that there were things that I did not know, things that the party opposite covered up; covered up from the opposition, covered up from this house, covered up from the country."
She said that although reforms were urgently needed "to improve care and to support staff", as the previous government had not funded its plans the reforms were not possible:
"In the previous parliament, the government made costly commitments to introduce adult social care charging reforms, but they delayed them... because they knew that local authorities were not ready and that their promises were not funded, so it will not be possible to take forward those charging reforms."
Labour says the Office for Budget Responsibility (OBR) was not aware of several instances of budget overspend, and a £9 billion contingency fund had already been spent three times over.
Many took to X (formerly Twitter) to point out that Labour had previously pledged to honour the introduction of the care cap.
Wes Streeting previously stated as shadow health secretary back in June: “One of the things that we've committed to is the cap on care costs... I've wanted to give the certainty this side of the election... that we're not planning to come in and unpick that and scrap that."
Sir Andrew Dilnot, who carried out a review of funding of care and support in 2011, described the apparent u-turn as a “tragedy”.
Speaking on BBC Radio 4’s Today programme, he said: “We’ve failed another generation of families," adding the decision was “unbelievably disappointing for hundreds of thousands of families who need care, for the people who are providing it, and for those who are trying to make decisions about it”.
Charles Tallack, director of data analytics at charity The Health Foundation said: "This is the third delay since the cap was legislated for in 2014 with cross-party support. While our pre-welfare state social care charging system continues to exist, people will continue to face a care cost lottery - with those with the greatest needs bearing the highest costs.
"The cap could have been a first step towards Labour's National Care Service."
Paul Johnson, director of the Institute for Fiscal Studies, posted on X: "A dreadful shame - another episode in generational failures to fund and reform social care."
The social care cap, which was due to come into force in October 2025, aimed to reform care costs for an increasingly ageing population and prevent families having to use all their assets to cover costs.
Dilnot originally set the amount people would have spent on personal and domiciliary care between £25,000 to £50,000, after which costs would be paid by their local authority. This figure was raised by subsequent governments from £72,000 to £86,000. People with assets of £100,000 or more would have to self-fund, until their assets dropped below £100,000.
Chancellor Rachel Reeves said £1 billion would be saved by scrapping the plan but has not provided an alternative to replace it. Instead, Labour points to its manifesto pledge to create a National Care Service, the details of which are yet to be revealed.