Quick answer
The Homecare Association’s report, published on 15 October 2026, found that English councils pay an average of £25.37 an hour for state-funded homecare in 2026/27, up about 3.7% on last year, while the National Living Wage rose 4.1%. Its Minimum Price for Homecare is £34.42 an hour. No contract in the sample met that price, and 61% paid below £26.17, the amount needed to cover statutory employment costs at the minimum wage. For providers, that means thin margins and long gaps between paying staff and being paid, so cash flow planning and the right facility matter more than ever.
How much do councils pay for home care in 2026/27?
The Homecare Association’s Fee Rates for State-Funded Homecare in 2026-27 analyses 176 regular homecare contracts with 107 English local authorities, 70% of the total (Homecare Association: fee rates 2026-27). The average fee rate is £25.37 an hour.
The average uplift from 2025/26 was about 3.7%, below the 4.1% rise in the National Living Wage. For comparison, last year’s report put the average at £24.10 an hour (Homecare Association: fee rates 2025-26).
Do council fees cover the cost of care?
According to the report, mostly not:
- The Homecare Association’s Minimum Price for Homecare is £34.42 an hour, and no contract in the sample met it.
- 61% of contracts paid below £26.17 an hour, the amount the Association says is needed to cover statutory employment costs at the minimum wage, before any overheads.
- It estimates a funding gap of around £2.3 billion in England, across councils and the NHS.
The full report, with its method, is available as a PDF from the Homecare Association. The Minimum Price is the Association’s own benchmark rather than a statutory rate, but it gives providers a clear reference point when they negotiate.
What does it mean for a home care provider’s cash flow?
Care workers are paid weekly or monthly, while councils and the NHS usually pay in arrears. When the fee barely covers the wage bill, there is little left to absorb late payments, new packages that need staff before they pay, or a rise in fuel and mileage costs.
Working capital facilities and invoice and debtor finance can release cash tied up in unpaid council invoices, so payroll is never at risk. Where a short-term need is clear, an unsecured loan may also fit, subject to lender criteria.
Should providers change their mix of work, or grow?
Providers can use the report when renegotiating rates with commissioners, review how much publicly funded work they take on, and build private client work alongside. Growth still needs investment: recruitment finance covers hiring and training carers ahead of new packages, vehicle finance helps rural rounds, and IT and software finance covers rostering and care planning systems.
For some owners, tight margins make a sale or a merger more likely, and for well-run providers they can create buying opportunities. Our page on care provider finance covers buying a home care business, acquisition finance explains how purchases are structured, and our news on Skills for Care’s 2026 workforce report covers the staffing picture.
What should home care providers do next?
- Compare each contract’s hourly rate with your true cost per hour, including travel time and overheads.
- Use the report’s figures in fee negotiations with commissioners.
- Check how long each council and NHS body takes to pay, and chase the slowest.
- Put a facility in place before you need it, not when payroll is due.
Our guide to preparing a finance application explains what lenders ask for. We search the market across 300+ lenders and approach those that understand care contracts. Instant Quotes shows your matches in minutes, with no credit check.
Common questions
How much do councils pay for home care per hour?
The Homecare Association’s 2026/27 report found an average council fee rate of £25.37 an hour across 176 contracts with 107 English local authorities.
What is the Homecare Association Minimum Price for 2026/27?
£34.42 an hour. The Association found that no contract in its 2026/27 sample paid at or above it.
How can a home care provider improve cash flow?
Common steps are chasing slow payers, renegotiating fees and putting a facility in place, such as working capital or invoice finance against council and NHS invoices, subject to status and lender criteria.
Does checking my options affect my credit file?
No. Instant Quotes involves no credit search. A lender only runs its own checks, with your permission, if you choose to apply.
Official sources
Published 19 October 2026. Figures and dates are taken from the sources named and were correct on that date. This article is for general information only and should not be treated as legal, tax, accounting or financial advice. Funding availability and lender requirements depend on individual circumstances.
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