LaingBuisson - Impact Assessment of the Implementation of Section 18(3) of the Care Act 2014 and Fair Cost of Care

This report, commissioned by the County Councils Network (CCN) provides a detailed assessment by LaingBuisson of the financial and market impacts of implementing Section 18(3) of the Care Act 2014 alongside the Government’s Fair Cost of Care (FCC) policy.

The government’s policy would enable more people to become eligible for state-funded care, and its principles of fairness and improved equity for self‑funders are broadly supported by local authorities.  

However, the report highlights substantial risks for councils, providers, and local care markets. Existing funding falls significantly short of what is required to deliver sustainable fee rates, and the report warns that introducing Section 18(3) under the proposed timescales could destabilise already fragile care markets – particularly in areas with high proportions of self‑funders.

The report focuses on the scale of underfunding, the likelihood of provider exits, operational pressures following the pandemic, and the administrative burden facing councils.

It finds that without significant additional national investment, the combined reforms risk undermining both market stability and councils’ ability to meet statutory duties.  

Key findings from the report include:

• Additional Fair Cost of Care costs estimated between £783m and £1.7bn per year (mid‑point estimate £1.232bn).  
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• Government funding allocation of only £378m, creating deficits of £405m–£1.3bn.
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• As a result of self-funders accessing council care contracts and current Fair Cost of Care rates being too low based on government funding, care providers across England could face lost revenue amounting to £560m a year.  
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• Providers in CCN areas account for 86% of all financial losses to the social care sector.  At mid‑point Fair Cost of Care take-up councils face £854m annual deficits.  

Recommendations to government include:

• Increasing Fair Cost of Care funding by at least £854m per year.  
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• Reconsidering the timetable for implementing Section 18(3) and extending pilot activity.
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• Conducting detailed research on public take‑up, provider impacts, and behavioural factors.
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• Issuing clear guidance on Fair Cost of Care assessments, fee‑setting and the use of top‑ups.
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• Expanding technical infrastructure and workforce capacity within councils.
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• Engaging the investor and provider communities to mitigate risks to market confidence.