In four weeks, the biggest change to social care funding in a decade takes effect — and most providers don't know it's happening.

From 1 April 2026, the Market Sustainability and Improvement Fund, the Social Care Grant, and Deprivation of Liberty Safeguards funding will stop existing as separate grants. They're being consolidated into the Revenue Support Grant and redistributed through a new Fair Funding Allocation. The ring-fence that required local authorities to spend this money on adult social care is being removed.

This edition explains what's changing, what it means for your fees, and what you should do before April.

Since 2023, the MSIF has been the main mechanism forcing local authorities to increase provider fee rates. It was worth £1.05 billion in 2025/26. It was ring-fenced: councils had to spend it on adult social care, and they had to report back to DHSC on what they paid providers. Over 90% of local authorities used it to increase fees. The Social Care Grant added further ring-fenced funding. Between them, these grants created a direct, visible, accountable link between central government money and the fees that landed in your bank account.

That link is being severed.

From April, 18 funding streams — worth £11.66 billion in total in 2026/27 — are being rolled into a single unringfenced Revenue Support Grant. Adult social care money will be part of a much larger pot that also covers children's services, housing, waste collection, highways, and everything else councils fund. Councils will get "notional allocations" showing what DHSC thinks they should spend on adult social care. But these are reference points, not requirements. There is no legal obligation to spend the notional amount.

The government's stated logic is simplification: councils were managing over 300 grants from across Whitehall, with 240-plus having conditions attached. Consolidation gives them flexibility to respond to local needs without tracking spend against separate pots.

The sector's concern is obvious. When adult social care funding competed only with other adult social care priorities, providers had some protection. When it competes with potholes, children's services, homelessness, and council tax freezes, history suggests social care loses.

Three specific risks matter for providers.

First, the fee uplift mechanism disappears. Under MSIF, local authorities were explicitly told to use the money for fee uplifts, particularly to absorb National Living Wage and employer NIC increases. They had to report their fee rates to DHSC. They were encouraged to go beyond inflationary uplifts. That reporting requirement and spending condition is gone from April. There is nothing stopping a council from absorbing the notional social care allocation into general reserves, or diverting it to plug a children's services deficit, or using it to offset council tax increases. The MSIF fee data collection — which ran every year since 2023 and gave DHSC visibility on what councils actually paid providers — has no confirmed successor for 2026/27.

Second, the redistribution creates winners and losers. The funding isn't just being de-ringfenced — it's being redistributed. From 2026/27, allocations will be phased: roughly one-third based on the new Fair Funding Assessment and two-thirds based on legacy allocations. By 2028/29, it will be 100% on the new formula. Some councils will gain funding; others will lose it. The government has included transitional protections (funding floors), but if your local authority is on the losing side of the redistribution, the pressure on fee rates will be immediate and real, regardless of what the notional allocation says.

Third, the £500 million for the Fair Pay Agreement is inside this unringfenced pot. The government has earmarked £500 million specifically for the first Fair Pay Agreement, which is supposed to increase care worker pay from April 2028. But this money will flow through the same consolidated, unringfenced Revenue Support Grant. Care England and the Homecare Association have both flagged this as a critical risk: a nationally negotiated pay agreement that requires local authorities to increase fees, funded through a mechanism with no guarantee the money reaches providers. The Health Foundation has estimated that £500 million spread across 1.5 million social care workers equates to roughly 20p an hour — and that's only if the money actually reaches the workforce.

DHSC is not pretending this is risk-free. The adult social care priorities document published in January explicitly states that local authority spending "will likely need to increase, at least in real terms" across the settlement period. It sets out three priority outcomes — quality care with a skilled workforce, independence with choice and control, and joined-up services at neighbourhood level — and says it will monitor whether councils deliver.

The key new accountability tool is "notional allocations." For the first time, DHSC will publish what it thinks each local authority should be spending on adult social care, covering a three-year window through to 2028/29. These are calculated from each council's current spend, adjusted for expected changes in overall Core Spending Power. Where a council's funding is growing by less than inflation, its notional allocation will be set to grow in line with inflation (expected at 6.3% between 2026/27 and 2028/29).

The government says it will "engage with local authorities throughout the financial year to gain insights into local decision-making, understand barriers to implementation, and identify steps taken to meet local challenges, prioritising engagement where data indicates significant variation from national averages."

In plain English: they'll watch, they'll ask questions, but they won't compel.

CQC local authority assessments add another layer. The regulator is assessing all 153 local authorities against their Care Act duties, and a poor assessment could create political pressure to maintain social care spending. Westmorland and Furness received its first assessment recently — just one point short of Good — showing the system is live. But CQC assessments are slow, and political pressure is not the same as a ring-fence.

1. Find your council's notional allocation. DHSC committed to publishing adult social care notional allocations for every local authority early in 2026, covering 2026/27 through 2028/29. If these aren't published yet, chase them. When they appear, compare them to what your council currently spends on commissioned care. The gap between notional allocation and actual spend is your vulnerability.

2. Ask your local authority directly: what is your planned fee uplift for 2026/27? Do this now, in writing. The absence of MSIF reporting means there's no central mechanism forcing councils to set and publish fee rates early. You need to create your own pressure. If your council hasn't set its 2026/27 fees by April, that's a red flag.

3. Build your cost-of-care evidence. Care England's analysis showed a £2.24 billion gap between what councils paid providers and the fair cost of care in 2024/25. That gap has only grown with the April 2025 NLW increase to £12.21 and the employer NIC changes. If your council tries to hold fees flat or offer below-inflation uplifts, you need a documented cost base to challenge them. Include staffing costs at current NLW plus employer NIC, property costs, insurance, training, compliance, energy, and a return that allows reinvestment.

4. Understand the redistribution. Check whether your council gains or loses under the Fair Funding Assessment. The provisional local government finance settlement (published December 2025) includes the Fair Funding Allocation Calculator showing each council's position. If your council is losing funding, prepare for harder fee negotiations and consider diversifying your income — more self-funders, NHS-funded nursing care, CHC assessments, or private top-up arrangements.

5. Engage with your local authority's budget-setting process. Council budgets for 2026/27 are being finalised now. Many councils hold public consultations on their budgets in February and March. Attend them. Submit written representations. Make the case that adult social care commissioning is a statutory duty under the Care Act, and that underfunding it creates safeguarding risk, market failure, and cost-shunting onto the NHS. Use the parliamentary committee's "cost of inaction" findings when they land.

6. Watch for the Fair Pay Agreement timeline. The consultation closed 16 January. Secondary legislation is expected by autumn 2026 to establish the Adult Social Care Negotiating Body. Negotiations begin in 2027, with the first FPA taking effect April 2028. The funding for this (£500 million) flows through the same unringfenced pot. If your council doesn't protect its notional allocation for social care, there will be no money to fund the pay increases that the FPA will legally require.

7. Connect with other providers. Sector bodies — Care England, the Homecare Association, the Care Provider Alliance, the National Care Forum — are all lobbying on ring-fencing risk. Feed them your local intelligence. If your council is planning below-inflation uplifts, that data helps the national case. If you're a smaller provider without sector body membership, consider joining. The lobbying matters more now than it has in years.

The government is betting that transparency (notional allocations), accountability (CQC local authority assessments), and political will (the Fair Pay Agreement commitment) will be enough to keep councils spending on social care without a ring-fence. It might work. The multi-year settlement gives councils three years of certainty for the first time in a decade, and the additional £900 million for adult social care within RSG is real money.

But the sector has been here before. Every time adult social care funding has been left to local discretion without protection, it has been squeezed. Between 2010 and 2020, councils cut adult social care spending by an estimated 12% in real terms while demand rose. The conditions that created that squeeze — competing priorities, austerity pressure, short-term political incentives — haven't disappeared. They've just been dressed in a new funding formula.

The providers who navigate this well will be the ones who don't wait to find out whether the bet pays off. They'll know their local numbers, they'll make the case early, and they'll have a plan B if the money doesn't flow.

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— The Care Operator