Social Care Funding Reform

NCF and Anthony Collins have co-produced the following briefing aimed at Senior Management level residential care providers:

The Care Funding Reforms – what senior management teams need to know

Residential care providers face the biggest change in how services in England are funded for a generation. The impact of the government’s care funding reforms, planned changes in legislation and new statutory guidance, will all have a significant impact on not for profit care providers.

The purpose of this note is to highlight for senior executive teams the potential impact of the changes on financial stability, forward planning and service delivery. There is embedded within this note links to four detailed guidance notes which we have produced on the various aspects of the reforms which we would encourage members to consider carefully. You can also download these by clicking the buttons below.

If you have any questions relating to this briefing, please contact Liz Jones, NCF Policy Director

Five tests for Creating a Fair Price for Care

We welcome the Government’s vision for a fair price for care in the White paper: Putting people at the heart of care and the further detail in the subsequent ministerial statement the Fair Cost of Care and Market Sustainability Fund: Purpose and Conditions for 2022-23.

The NCF has long campaigned for a Fair Price for all types of care, one that meets the true cost of good quality, sustainable care.

The current system puts a huge burden on those who need, and are required to pay, for their own care and support under the existing means-testing arrangements. This has created and sustains a fundamentally unfair situation where people paying for their own care cross-subsidise the state.

We have set out five clear tests that must be met in the creation of the Fair Price for Care. Ultimately, a true Fair Price for Care needs to be met by the state when commissioning care on behalf of people and this, in turn, will enable providers to rebalance the prices paid by individuals who fund their own care and create a sustainable care offer for the future.

The Fives Tests

The current combination of unfair cross subsidy and uncertain commissioning approaches that don’t cover costs undermines the long-term financial sustainability of care providers. The Fair Price for Care offers a prize to address this – failure to do so will simply compound the current market instability and market failure risks and will undermine the whole ambition for social care reform for all those who draw on care and support services.

This will enable care providers to pay staff in line with the skills and expertise they bring, at levels commensurate with other sectors and enable more professional development and clear career pathways. Failure to do so will compound the existing, systemic workforce pressures in social care and inevitably, workforce pressures across the wider health & care system.

Failure to do so will undermine the whole ambition for social care reform for all those who draw on care and support services.

The adult social care white paper is strong on innovation and technology ambitions – these will only be realised with a Fair Price for Care that reflects changing needs and requirements of the future.

Not-for-profit care provision ensures that all of the funding from either government or citizens is directed towards the delivery of care now and in the future, ensuring that the money remains in the sector and is reinvested to improve the quality of care. This will help to give politicians and the public reassurance in their investment in social care and kickstart the move to a longer-term strategic commissioning approach to grow the NFP care & support sector.

NCF View

It is positive to see a clear narrative from the minister which recognises that the move to a fair price to care is an essential part of the reform to social care and a clear acknowledgement that ‘a significant number of local authorities are paying residential and domiciliary care providers less than it costs to deliver the care received’. However, the fundamental challenge remains in terms of the overall funding currently allocated to enable LAs to move to a true Fair Price for Care. Discussions to date with the DHSC on their plans to support the sector with meaningful cost of care exercises indicate a consensus amongst stakeholders that these will not be meaningful if LAs are not properly funded to adopt a Fair Price for Care and so far, the approach will not meet the Five NCF Tests.

Given that we are only at the start of this journey in determining the fair price for care, it is hard to understand how the DHSC has already stipulated an estimate of £600m funding for each of the following two years to address the unfair cross subsidy issue and move to a realistic fully funded fair price for care. Other estimates to address the shortfall in care funding have arrived at a figure closer to £7bn a year. The funding required to achieve this must be urgently reviewed in light of the outcome of the fair price for care cost exercises, not set before they are even carried out.

There is a key role here for the not-for-profit voice in shaping the Fair Price for Care. We at the NCF represent the not-for-profit care and support sector, which offers greater transparency in terms of governance, finances and accountability than the wider sector.

The not-for-profit organisations we represent place a strong emphasis on the long-term sustainability of their care and support services in the local communities they serve, often having deep roots due to their origins and history in local areas, alongside their focus on person-centred care.

Next Steps

Care providers’ experience of previous cost of care exercises by local authorities (LAs) is variable. Some exercises are done in a genuine collaborative and enquiring manner with a genuine desire to understand the full costs of care while others can feel more like ‘tick box’ exercises designed to create a race to the bottom for costs of care.

While we understand that the DHSC may wish to enable some degree of flexibility in the localised response to delivering cost of care exercises, providers are currently living with the consequences of too much flexibility and too little prescription in the experience of the administration of the Workforce Recruitment & Retention Fund; that has resulted in with 152 different ways of approaching this, with different and unhelpful constraints and patchy impact on the frontline.

It is essential that LAs have a clear and consistent framework to support them in running effective, transparent and collaborative cost of care exercises, which are constructive and manageable for care providers. This includes:

  • A clear national framework for the cost of care exercises, that sets the longer term ambition for the Fair Price for Care, making it clear that this is creating a new baseline for a sustainable cost of care which needs to meet the tests outlined above
  • A clear methodology to support the framework for cost of care exercises which is developed in partnership with not for profit care providers, especially those who work across different local authority areas and markets
  • A clear, shared, co-produced assessment framework for the monitoring approach by DHSC when assessing fair cost of care exercises, market sustainability plans and the spend reports on immediate progress towards better fee rates and a more sustainable market from LAs
  • Working with the NCF expert reference group, made up of our members who all deliver NFP care and support services, to create a truly co-produced approach to developing the Fair Price for Care


Making sure that the voice of people who use care and support services is also part of the discussion. While they may not wish to get involved in the detailed technicalities, their view of what they would like commissioners to include in the Fair Price for Care is key to enabling care providers to do so. Failure to take account of people’s full needs and preferences, which providers must be properly funded to meet, will result in little improvement in the current situation.


The Government’s white paper says: ‘Our 10-year vision for adult social care people who self-fund their care do not have to pay more than local authorities for the same service.’

The White paper includes a promise to: ‘Ensure that self-funders can access the same rates for care costs in care homes that local authorities pay, ending the unfairness where self-funders have to pay more for the same care, whilst ensuring local authorities move towards paying a fair cost of care to providers’

And it makes commitments to: ‘provide funding to support local authorities to prepare their local markets for reform, including by moving towards paying providers a fair rate for care which reflects local costs, including workforce, where appropriate. We will be working closely with local authorities and providers as we produce future guidance.’

And the promise to: ‘to support a sustainable care market where care and support providers are paid a fair rate for care, which encourages diversity of provider models, prioritises outcomes, and enables people to have a wide range of high-quality care and support options to choose from that provide personalised support to live a fulfilling life.’

The subsequent Ministerial Statement on the Fair Cost of Care and Market Sustainability Fund: Purpose and Conditions for 2022-23 provides the detail on how the Government will provide £1.4bn over the next three years to support local authorities to prepare markets for reform and move towards paying social care providers a fair cost of care.