Social care Insights
From Simon Bottery

The Government’s ‘Goldilocks’ fair cost of care policy is risky and underfunded, says Simon Bottery, but has built-in pressure valves for local authorities.

Though the ‘cap on care costs’ has had all the headlines, arguably the most radical Government reform of adult social care is the plan to introduce a ‘fair cost of care’. The intention is that local authority commissioners identify what it costs to provide high-quality care – and then pay it.

That would be a major departure from the care marketplace in recent years, which has seen many local authorities pay less for care than a sustainable rate. In turn, to keep providers in business, self-funders have had to ‘overpay’ for their care, perhaps by as much as an extra 40%.

Now however, the Government plans to give self-funders the right to ask their local authority to arrange their care – at the rate the local authority would have paid.

That threatens to strip providers of the 40% mark-up they have relied upon to balance their books.

This, then, is where the ‘fair cost of care’ comes in. In essence, it replaces the rate paid by the local authority, which is too low, and the rate paid by the self-funder, which is too high, and replaces them with one single ‘fair rate’ that is paid by both. It’s as if the theme of the Goldilocks fairy story, with its tale of one bowl of porridge being too hot, another too cold but a third ‘just right’, had been applied to the care home fees market.

So, by 14th October, local authorities are to have calculated a ‘fair cost of care’ and said how quickly they will move to paying it. And there is Government money to help them pay the ‘fair rate’ – £1.36bn over three years. So everyone will live happily ever after, apparently.

The original Goldilocks story, though, is a dark tale which does not have an unambiguously happy ending. Goldilocks does escape from the Three Bears but we are told she may have ‘broken her neck’ in the escape or gotten lost in the woods forever. And it is by no means clear that the Government’s ‘Goldilocks’ fair rate of care policy will end happily, either. While there is support from local authorities and providers for the basic principle, the concern is that there is insufficient funding to make it work. Industry experts Laing Buisson and the County Councils Network have estimated that at least twice as much is needed, just for care homes.

In practice, though, the Government has built in a number of ‘pressure valves’ for local authorities. These include the potential for a slow pace of change – the Government’s language is about ‘moving towards’ a fair rate of care, rather than having fully arrived there by 2025. In addition, there is no rigid template for local authorities to calculate a ‘fair rate’. Instead, they can make their own decisions, even about what a reasonable rate of return on capital for providers might be. Finally, there is flexibility about how it might be applied: the ‘fair cost’ is not intended to be fixed across all providers in a local authority.

These are wide blurred areas which local authorities may be able to exploit to implement an ambitious policy with limited resources. It may mean, however, that a ‘fair rate of care’ still feels much less than fair to providers and service users.

Simon Bottery is a Senior Fellow in Social Care at The King’s Fund. Email: Twitter: @blimeysimon

About Simon Bottery

Before joining The King’s Fund in 2017, Simon spent almost 10 years as Director of Policy at the older people’s charity Independent Age. He has wide experience in policy, communications and journalism, including as Director of Communications at Citizens Advice, in the commercial sector for Guinness and in BBC local radio.

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