Fair cost of care: fix or fudge?

By Natasha Curry | 03 August 2022

As the drama of the Prime Minister stepping down swept Westminster last month, it was easy to miss the announcement that implementation of a key part of the Government’s social care reform programme – the fair cost of care – would be delayed.

Pushing back the date by which people already residing in care homes will be able to access the (generally lower) rates paid by councils for care, the decision was a response to growing concern among councils and social care providers that implementing the policy within the financial envelope and on current timelines carries significant risks.

The fair cost of care policy represents a comparatively bigger shift in the workings of the social care system than the more widely publicised cap. On the surface, it offers a simple and welcome fix to a deep unfairness that plagues the social care system. It is intended to enable people who fund their own care (self-funders) to pay the same fees as councils do for their clients by encouraging councils to pay higher rates for care. A decade of pressure on budgets has resulted in the majority of local authorities paying unsustainable rates to providers. This has led to providers relying on charging self-funders more to remain financially viable – this can see self-funders paying around 40% more for residential care than council-funded peers.

Central government, councils, providers, carers, and people who draw on social care are broadly united in recognising the need to fix the market. Sudden and frequent exits of providers that are no longer financially viable disrupt continuity of care, create distress and leave councils scrambling to find alternative providers. Councils report finding it increasingly difficult to find sufficient capacity to meet rising need. If higher rates were paid across the board, it is hoped the market may be put on a more stable footing.

But there is growing disquiet that the policy is unworkable within current parameters. For councils to be able to pay providers a consistently sustainable rate for care, there needs to be enough money available. Local authorities and providers have raised concerns that £1.36bn made available to 2024-25 is insufficient to bring stability to the market, let alone enable innovation or greater investment in infrastructure, staff training and wages. Given many providers are already struggling with the ability to charge a cross-subsidy, unless rates are raised substantially then removing the cross-subsidy could lead to further provider closures and diminished capacity.

Implementing and administering the new regime will require substantial additional capacity within councils, requiring a range of skills. Every individual wanting to access council rates and/or meter towards the cap will require a needs assessment and a personal care account. Long waits for assessments suggest that capacity is already stretched.

Fair cost of care is a welcome initiative and a potentially helpful first step on the journey to fixing this fractured market, where the cross-subsidy is just one of many ills. But there is growing concern about the gap between its laudable ambition and the realities of implementation. Delaying full rollout eases the pressure temporarily but without sufficient funding, there remain considerable risks.

Social care provision is hugely varied and what is ‘sustainable’ and ‘fair’ will differ according to provider type, quality and service among other factors. With the spiralling cost of living adding further complexity – and providers already struggling to recruit and retain enough staff – the fixed allocation of funding for the policy may prove too restrictive. Councils may continue to pay rates that render providers financially unsustainable over time. Without the self-funder subsidy to fall back on, providers could start to rely on ‘top up’ payments for extra services – something that could become the new cross-subsidy.

Alternatively, councils may increase fees but look to reduce the number of people whose care they fund by tightening eligibility criteria. That would fly in the face of the spirit of the reforms which seek to increase the number of people able to access public funding.

The social care reform White Paper promised to deliver a ‘vibrant, healthy and diverse’ market that fuels innovation and enables choice and control. That is an ambition that all parts of the sector can get behind but one that is looking increasingly unachievable within the current parameters. To create a genuinely thriving market, it is crucial that enough money is made available not only to stabilise provision in the short-term, but also to offer financial certainty into the long-term.

Natasha Curry is deputy director of policy at the Nuffield Trust

@NatashaCurry123 @NuffieldTrust

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