Funding social care: the role of deferred payment agreements

Our report explores whether housing assets could be better used to fund residential care.

Since the Care Act 2014, local authorities in England have been required to offer deferred payment agreements (DPAs) to self-funders of residential care with less than £23,250 in savings. Under a DPA, local authorities defer care costs in exchange for a claim on the participant’s housing equity.

While the Department of Health had high hopes for DPAs, uptake since the Care Act has been disappointing. Data from NHS Digital suggests just 3,600 took out an agreement in 2015-16, compared to the Department’s projection of 12,300.

Reform’s paper argues low uptake can be explained by the restrictive means test for DPA support, and considers the merit of increasing the eligibility threshold to people with non-housing assets of £100,000.

Using data from the English Longitudinal Survey of Ageing, Reform finds the beneficiaries of this policy would still be among the most in need. Deferred payment agreements could, therefore, improve funding options to those entering a care home, without significant cost to the Exchequer.