The aim of this research has been to make a contribution to deliberations concerning the relative costs of provision of domiciliary services for the elderly in local authorities in England and the implications for funding. The main services considered have been day-centre services and home-care services, and the particular cost areas investigated have been travel-related costs as associated with distances travelled by day-centre vehicles and care workers and with worker travelling hours. These costs are influenced by the population settlement and dispersion characteristics of the areas served and funding mechanisms are needed (and are in place) to compensate service providers. However, current mechanisms have been widely criticized and the research reported here reaches conclusions about whether such criticisms are justified and how improvements might be brought about. The methods used have involved detailed operational modelling of the selected services in a sample of local authority areas and the generalization of the findings to England as a whole.