The cost of residential care is often debated, but it is not unknowable.
Care home costs can be built up from first principles — using a method that has been recognised in the sector for many years.
The Joseph Rowntree Foundation’s work on fair cost of care, including William Laing’s Calculating the costs of efficient care homes, set out a practical way to understand care home costs.
This approach starts with:
the number of hours of care required
the cost of staffing
the wider costs of running a home
What the model showed
Around 10–15 years ago, a typical residential care home model:
required around 22 hours of care per resident per week
had staffing costs of around 55% of total expenditure
This implied a sustainable price in the region of:
£900–£1,000 per week per resident
Since then, three major pressures have increased costs:
Residents now require more support, increasing care hours.
Wages, National Insurance and recruitment pressures have risen significantly.
Energy, food, insurance, compliance and capital costs have all increased.
Applying these changes to the same model:
The fair cost of care today is around £1,300–£1,500 per week
(typically around £1,400)
Local authority
£800–£900
Fair cost of care
~£1,400
Private residents
£1,600+
For a typical local authority placement:
Cost of care: ~£1,400
Local authority funding: ~£850
Shortfall: ~£550 per week
This gap is not removed — it is redistributed.
It is covered through a combination of:
third-party top-ups
(often £300–£700+ per week)
higher fees for private residents
(double local authorty fee rates - £200-£400+ per week above a fair price for for care.
pressure on provider margins and workforce pay
In many cases:
The “top-up” is not a small additional payment —
it is what brings the total fee up to the real cost of care.
Where funding does not meet the cost of care:
placements often depend on top-ups
providers increasingly rely on private funding
fewer homes can sustain local authority-only placements
Impact on the shape of the market
Investment is responding to this funding model.
New care homes are increasingly:
larger and more modern
higher specification
designed for higher weekly fees
This reflects where care can be funded sustainably.
The cost of care is relatively clear.
But the way it is funded means:
different people pay very different amounts
access increasingly depends on ability to pay
the market shifts toward higher-fee provision
A simple conclusion
Care is being delivered every day at a known cost.
The questions are whether that cost is shared fairly and transparently and whether the current system can maintain an afordable provider market for an ageing population.