County Care Markets: Market Sustainability & the Care Act

This report examines the sustainability of residential and nursing care markets in county areas and the impact of the Care Act on an already fragile system. It finds that years of funding reductions have left councils unable to pay fees that reflect the true cost of care. As a result, providers have relied heavily on cross‑subsidy, charging self‑funders significantly more to offset lower local authority fees. This model is now increasingly unsustainable.

The report shows clear evidence of market polarisation, with many providers shifting their focus towards self‑funders and higher‑end provision, while reducing capacity for council‑funded placements. This risks shortages of affordable care, increased provider exits, and reduced choice for people who rely on publicly funded care. County areas are particularly exposed due to older populations, higher demand, and lower relative funding.

The Care Act, while aiming to improve fairness and transparency, is likely to accelerate these pressures. Greater transparency around fees and changes to asset thresholds are expected to reduce self‑funder fees, weakening providers’ ability to cross‑subsidise and increasing financial pressure on councils. Modelling suggests this could create substantial unfunded costs for local authorities and threaten market stability.

The report concludes that without urgent action, care markets are at risk of failure, with serious consequences for service users and the NHS, including increased delayed hospital discharges. It calls for targeted additional funding, revised Care Act cost assessments, continued delay of certain duties, and closer collaboration between government, councils and providers.

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