In September 2021, government set out its new plan for adult social care reform in England. This included a lifetime cap on the amount anyone in England will need to spend on their personal care, alongside a more generous means-test for local authority financial support. This included the convergence of private and public sector fee rates, with the extension of Section 18(3) of the Care Act 2014 to new residential placements, from October 2023.
In December 2021 government published a white paper, People at the Heart of Care, that outlined a 10-year vision that puts personalised care and support at the heart of adult social care, in line with The Care Act which requires local authorities to help develop a market that delivers a wide range of sustainable high-quality care and support services, that will be available to their communities. Subsequently, the Market Sustainability and Fair Cost of Care Fund was announced. Additional funding is also being made available for housing and technology; innovative new models of care; training, recognition and wellbeing for the social care workforce; and sector improvement alongside other reforms.
The government required local authorities to start building strong foundations and prepare markets for wider charging reform and thereby increase market sustainability. The cost of care exercise was an opportunity for local authority commissioners and local care providers to work together to arrive at a shared understanding of what it costs to run quality and sustainable care provision in the local area and that is reflective of local circumstances. It was also an opportunity for commissioners and providers to work together to draw up plans to shape and improve the local social care sector and identify improvements in relation to workforce, quality of care delivered, and choice available for people who draw on care.
Local authorities were required to survey a range of ‘in-scope’ providers (representative of the local market) as part of the cost of care exercise, to improve their understanding of the actual costs of delivering care in their area. Local authorities were required to use the exercise to determine and report the median actual operating costs for the following categories, plus evidence and values for return on capital and return on operations. Together these make up the fair cost of care. The categories are:
- 65+ care homes
- standard residential care
- residential care for enhanced needs
- standard nursing care
- nursing care for enhanced needs
- 18+ domiciliary care
The government recognises that this may oversimplify what is a complex picture of care and support needs. But for data collection purposes it was necessary to find a way of standardising cost reporting. The outcome of the cost of care exercise was not intended to be a replacement for the fee-setting element of local authority commissioning processes or individual contract negotiation. In practice, and as many local authorities move towards paying the fair cost of care, it is expected that actual fee rates paid may differ due to factors such as rurality, personalisation of care, quality of provision and wider market circumstances.
Cost of care exercise - points to consider:
- The exercise did not take all care settings into consideration and therefore does not give a true portrayal of costs across the sector in Greenwich, as a majority of our Care Homes are predominantly for 18+ residents. The development of tools to capture data was not across all working age adult provision and therefore has produced a distorted outcome of our local care fees.
- The data is now out of date, and represents a period following the pandemic which is not a true reflection of how the market is currently operating. Further, there is no consideration for the impact of recent economic changes.
- Although much of the 21/22 spend reported by providers was based upon actual spend, the April 2022 costs were inflated by a percentage that may or may not reflect actual costs as they were predictive.
- The exercise was undertaken as a means to estimate the potential loss of cross subsidy from self-funding clients, potentially commissioning their bed based care via local authorities using section 18 (3) of the Care Act, which has now been delayed until October 2025 at the earliest. Therefore, providers will continue to benefit from cross subsidy for the next two years.
- Not all providers submitted costs and so it is impossible to say if the calculated figures are in fact a true representation of mean / median values. Also, this exercise made no provision for the packages of care commissioned outside of Greenwich.
- These figures will not replace but will be taken into consideration when undertaking uplift calculations. The outcome of the Fair cost of care exercise is not intended to be a direct replacement for the fee setting element of the local authority commissioning processes or individual contract negotiations. It is expected that actual fee rates may differ based on sound judgement, evidence and local negotiation. The fair cost of care will be an element to inform future negotiations taking into consideration other known market factors such as inflation, demand, capacity, benchmarking, quality and importantly affordability for the local authority.
- We reinforce the DHSC message that any uplift calculations will be conducted in a way that does not undermine our tendering and commissioning processes. Allowing providers to deliver reliable and consistent, good quality care which is affordable for the local authority, in line with our available budget.
Alongside cost of care exercises, local authorities were required to develop and submit a provisional market sustainability plan, which was followed by a final market sustainability plan when local government budgets for 2023 to 2024 were confirmed.
The primary purpose of the Market Sustainability and Fair Cost of Care fund was to support local authorities to prepare their markets for reform, including the further commencement of Section 18(3) of the Care Act 2014 in October 2023, and to support local authorities to move towards paying providers a fair cost of care. Grant conditions were restricted to use of funds, and it was mandatory for the Council to spend the majority of this grant on uplifting fees for ‘in-scope’ providers.
In the November 2022 Autumn Statement, the government announced delays to the planned adult social care charging reforms until October 2025.
As a result of the delays, there have been some changes made to the fund for the 2023-24 financial year. Grant conditions have not yet been confirmed in full. What we know so far is that:
From April 2023, the fund is being renamed as the Market Sustainability & Improvement Fund (MSIF). The grant is not expected to be restricted to spend on 65+ care homes and 18+ domiciliary care.
Local authorities will have flexibility to use the MSIF to drive improvements across a range of priority areas, to best address local sustainability and improvement needs. The priority areas are:
- Increasing adult social care capacity
- Reducing waiting times
- Increasing workforce capacity and retention
- Increasing fee rates to close the cost of care gap in an area
Local authorities will be able to decide how they choose to focus the MSIF, in line with local circumstances and priorities. Grant conditions will specify that local authorities must evidence improvement in one of the target areas and provide assurance that other target areas have not worsened. Local authorities will also need to meet specific conditions governing the use of the additional funding provided.
ASC charging reform: Annex B care homes
ASC charging reform: Annex B Homecare
For more information on Adult Social Care charging reforms visit - Adult social care charging reform: further details