Q
What is the fair funding allocation and what are the changes coming in?
A
The fair funding allocation for adult social care in England is an allocation of money which is granted to local authorities from central government. Part of this includes funds to help cover costs such as care homes, domiciliary care and the new fair pay agreement for care workers. The aim of the simplified approach is to make it fairer and easier for local authorities to manage their budgets.
In the financial year 2028/29 there has been a further £4.6 billion allocated through the multi-year Provisional Local Government Finance Settlement. This is in addition to the £500 million for the first ever pay agreement which represents the most significant investment in improving pay and conditions for adult social care staff to date. The Government has made the following changes in the fair funding allocation that would affect care.
- Consolidating the grants — this is where smaller restrictive grants from different departments are consoloated into larger funds such as “adult social care” or “children and families” to allow them to be used more widely within a specific area.
- Notional allocations — this is a calculated share of the funding to ensure that the funding is distributed fairly, which in turn means that they are able to ensure that funds are used for care rather than allocated elsewhere.
- Fair funding assessment — this is a formula to measure local authority needs and measure the more deprived areas against those who are more affluent to have more of a share of the funding. The settlement for 2026–27 and 2028–29 is the first time since 2013 that the government has carried out a full reassessment of councils’ relative needs. This has been done through formulas developed within the Fair Funding Review 2.0. In addition to this, as part of the fair funding allocation, from 2026/27, there will be £5.9 billion social care grant and £2.64 billion Local Authority Better Care Grant (LABCG).
- Better Care Fund (BCF) — this strictly allocated for joint health and social care funding to allow those individuals with both health and social care requirements to receive better quality care.
In 2025, the 10 Year Health Plan was announced as a way for the BCF to be able to focus on the vital integration of services between health and social care. This impacts a wide range of people with growing numbers of those in care living longer and having multiple comorbidities. Any changes to reform for the funding of integrated services will not be introduced until the financial year 2027/28 and it is important to note that any funding that is made available for adult social care, will not be impacted by this.
The multi-year local government finance settlement provides councils with greater financial certainty over several years, which should help to improve the stability of funding available for adult social care through local authorities. However, while longer-term funding arrangements are welcome, there is an argument that they alone will not address the significant challenges facing local government and the adult social care sector. To have a meaningful impact, funding reforms also need to tackle the underlying pressures on services, including rising demand from an ageing population, increasing complexity of care needs, workforce shortages, rising provider costs and ongoing financial pressures on local authorities. Without addressing these wider issues, greater funding certainty may improve planning but is unlikely to resolve the long-term sustainability challenges facing the sector.
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