March 27, 2018

Cross subsidisation in care homes – Government response

The CMA Report

In 2016/2017 the Competition and Markets Authority (CMA) studied over 11,000 residential care and nursing homes that offer support to older people in the UK. They looked into the issue of “cross-subsidisation”, and whilst they found that self-funders could pay up to 40% more than local authority residents for their care, the CMA did not recommend that the practice be banned. Instead it called for additional funding for local authority social care.

Government response

On 5 March 2018, the Government published its response to the CMA report. It has accepted (or accepted in principle) all of the recommendations put forward by the CMA.

The Department of Health and Social Care has said that “the CMA identified two broad concerns about the care homes market. Firstly, that those requiring care need greater support in choosing a care home and greater protections when they are resident. Secondly, that the current model of service provision cannot be sustained and that the sector is not positioned to attract investment to meet future needs.”


The CMA put forward its recommendations in the following themes:

  • capacity: planning must be of such quality as to ensure that there will be sufficient capacity to meet future need
  • consumer protection: to improve compliance and ensure protection for the customer both when choosing a care home and when a resident in a care home
  • consumer information: to improve communication and interaction between the consumer and the care home.

Next steps

Moving forward, the Government has said that it will:

"publish a Green Paper by summer 2018, setting out plans for improving care and support for older people and how to tackle the challenge of an ageing population…

…Ahead of the Green Paper, we will continue to work with the CMA and the adult social care sector to implement the CMA’s recommendations to improve consumer information and protections."


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