Over the last decade, England’s residential rehab sector has been quietly shrinking. Rehab placements have fallen by almost 50%, and the number of available services has declined by a similar proportion. At the same time, service quality and regulatory expectations have never been higher. Yet despite this increased scrutiny, very little is known about the true size, shape, or functioning of England’s state-funded rehab system today.

To help fill that gap, Phoenix Futures submitted Freedom of Information (FOI) requests to every local authority in England, asking for details of budgets and expenditure on residential rehab over the past three years. What we received back offers one of the clearest pictures in years of how rehab is funded in England, who controls the money, and what it means for the future.

After years of funding decline, the Dame Carol Black report in 2021 and the UK Government’s From Harm to Hope (2021) strategy of the same year both promised a reinvigoration of the residential treatment sector in England, specifically:

“We will develop and implement mechanisms to make sure that there is adequate provision of inpatient detoxification and residential rehabilitation in all areas of the country.” From Harm to Hope (2021)

That reinvigoration never materialised. So, we’re sharing what we’ve learned to help build understanding, inform public debate, and contribute to a stronger, fairer treatment system.

Who Holds the Money?

One of the clearest findings from the FOI returns is how fragmented accountability is:

30% of local authorities delegate their rehab budgets to community providers, while 70% retain commissioner-level control. But when you look at the value of the budgets, the split is closer to 60% commissioner-managed vs 40% provider-managed, suggesting that larger areas with bigger budgets are more likely to delegate to community providers, while commissioners in smaller areas or regions such as individual London boroughs, local authorities in the North West and North East typically hold budgets themselves.

This matters because who controls the budget influences how money is spent, how flexible that expenditure is, and ultimately how many people access rehab.

A Postcode Lottery in Access and Funding

Around 30% of local authorities reported having no defined rehab budget at all. In those areas budgets are combined with inpatient detox or wider social care budgets. In terms of transparency for families seeking rehab and understanding local availability, this seems problematic. This is in contrast to Scotland, where residential rehab placement and funding figures are published publicly and people can see how their local area performs. The comparative lack of information in England is frustratingly opaque for people seeking support. It also risks confusion for staff supporting people seeking rehab, who may be unable to confidently offer rehab without a clear idea of funding availability.

Today around 1% of people in community treatment can access residential rehab. Traditional access routes outside of community treatment, for example ‘prison to rehab’ and ‘homelessness to rehab’, have largely died out as funding has increasingly been consolidated with community providers.

It is important to note that the variation in budget and expenditure we can see within both the FOI response and our wider analysis also highlights the extreme postcode lottery of access across England. There is a clear north/south divide in access and also significant variability within those regions at local authority level. The street you live on can make a real difference to your chances of getting rehab. In some areas, rehab access is almost non-existent unless people can self-fund, and we know that 15% of all nationally reported annual placements are funded privately. Again, in contrast to Scotland, where privately funded placements are excluded from publicly published figures.

We also know that availability of rehab does not correlate positively with prevalence of drug or alcohol use and related harms. In fact, the broad picture is that spend and access are lowest in areas where need is greatest.

This variation in budget, combined with a lack of transparency, results in an ever-deepening postcode lottery. This is reflected in the language we often observe from people who access rehab: “I know I’m very lucky to be here” is a common refrain. It really does feel like a system of the lucky few winners and the multitudes of losers in a healthcare lottery.

What’s Happening to Budgets?

We know that rehab budgets fell by around 15% per annum from 2014 to 2020. More promisingly, over the last three years overall rehab budgets increased by around 9% per year. Overall, rehab sector funding remains at record low levels and, crucially, despite that 9% increase over the last three years, placements have not increased. In fact, our analysis shows a small decrease last year, largely driven by reductions in the West Midlands.

This suggests that recent budget and expenditure increases are being absorbed by rising prices or upstream costs. It is worth noting that very little, if any, of the recent increase in investment in substance use treatment has reached residential treatment. The mechanism promised by From Harm to Hope was not implemented, and so the only means of rehabs accessing any additional funding to cover increasing utility costs in recent years is to increase price.

Even more striking:

• Over the last 10 years, regions with the greatest number of areas of severe and multiple deprivation have been disproportionately affected by rehab budget cuts. People living in those areas for whom the community system does not meet their needs due to multiple and severe disadvantage have been further disadvantaged.
• We estimate that restoring access in those areas of deprivation to 2014 levels would require an additional £40m per annum spend across England.
• Current budgets are not fully utilised, with an annual underspend of around £5 million nationally. That is a huge amount of money over the last three years alone (approximately £15m) that could have helped more people into treatment.

A system that sees budget left underspent in regions with the highest drug and alcohol-related deaths underlines the need for the reform identified by Dame Carol Black and From Harm to Hope.

What Is the Size of England’s Residential Rehab Market?

Based on the FOI returns:

• Total market size (budgeted value): approximately £40 million per year
• Annual expenditure is approximately £35 million
• Budget utilisation is around 90%, leaving an estimated £5 million underspent annually

Whilst we do not have the same comparative figures for 2014 (the point at which funding and placements started to decline), our best estimate is that market size has likely more than halved over the past 10 years as placements and services have declined and treatment durations have reduced.

This shrinking residential treatment market is one of the most important and least discussed aspects of the treatment landscape today.

What Does This Mean for the Future?

The FOI exercise provides evidence of a system that:

• Remains fragmented, with no consistent approach to funding or commissioning
• Is under-utilising available budgets
• Is struggling to recover after a decade of cuts
• Has not benefitted from the promise of adequate provision in all areas of the country
• Is seeing rising costs but falling placements
• Leaves access to life-saving treatment heavily dependent on geography, local budget structures, and whether an area chooses to prioritise rehab, all while local residents are not informed of those decisions

Despite being amongst the most highly regulated parts of the treatment system, residential rehab remains the least understood, least transparent, and the least strategically planned.

Why Phoenix Is Sharing This

We believe transparency is essential for rebuilding a strong residential treatment sector. This FOI analysis is a step towards:

• Mapping how the system currently functions
• Highlighting the gaps and inequities
• Supporting national bodies, local commissioners, and providers to plan more effectively
• Ensuring people who need intensive, coordinated treatment can access it

The residential sector may be smaller than it was 10 years ago, but it is vibrant, creative and has a history of adapting to emerging need. Latest developments include ketamine care, meeting gender-specific needs and co-existing mental health, to mention a few innovations. With the right investment, planning and political will, rehab can once again become a core part of England’s drug and alcohol treatment system as it was a decade ago and as it is now across Europe.

Phoenix will continue to share what we learn so we can help rebuild a sector that saves lives, restores families, and offers hope to thousands of people every year.

For further information on the access and outcome in residential treatment Collective Voice publishes new resources to improve access and outcomes in residential treatment - Collective Voice