Last updated: 28 March 2023
Next review: 28 March 2024
Market sustainability and fair cost of care
In December 2021, the Government published a white paper entitled ‘People at the Heart of Care’. This white paper set out a series of local authority responsibilities to prepare for the then intended adult social care reforms, which included changes to the way people are charged for social care.
The Government set up a Market Sustainability and Fair Cost of Care Fund and distributed grant funding to local authorities in England totalling £162m in the financial year 2022/23. The intention of the grant funding was to support local authorities to carry out a ‘Cost of Care’ exercise with their provider market in 2022/23 and then set out how they would use the future years' funding to ‘move towards’ paying a ‘fair cost of care’ – informed by the outcome of the cost of care exercise in each local authority, alongside other relevant market conditions.
On 17 November 2022, the Government delivered its Autumn Statement and as part of that, they announced that the charging reforms set out in December 2021 were going to be ‘delayed’ until 2025. Furthermore, they announced changes to the planned funding allocations for Adult Social Care for 2023/24 and 2024/25, and a reduction to the funding allocation and conditions attached to the ‘Fair Cost of Care’ Grant.
As part of the reform, local authorities are required to complete a fair cost of care exercise to arrive at a shared understanding with providers of the local cost of providing care. This is to ensure that people find Adult Social Care fair and accessible.
For the purposes of the exercise, the Department of Health and Social Care (DHSC) considers ‘fair’ to mean the median actual operating costs (the amount in the middle of the lowest cost and the highest cost) for providing care in the local area (following completion of the exercise). ‘Fair’ also means what is sustainable for the local market. This is, on average, what local authorities are required to move towards paying providers.
The government recognise the complexity of local care markets, and the risk of oversimplification, but it is necessary to find a way of standardising cost reporting; the median is designed to reflect that there are a range of local costs.
Our Fair Cost of Care Exercise is published below. It follows the guidance of the Department of Health and Social Care and reflects the key principles of consistency, transparency, and a partnership approach.
In guidance from the government, this report is known as “Annex B”.
Download The Annex B report for residential and nursing care for ages 65 and over
Download The Annex B report for Domiciliary Care ages 18 and over
The Market Sustainability Plan
In addition, local authorities must publish a Market Sustainability Plan detailing how they plan to move towards a fair cost of care (where this is not already being paid) over the next three years. We are publishing our MSP below as required.
- The first section of the MSP assesses the current sustainability of local care markets
- The second section assesses the impact of future market changes between now and October 2025
- The final section details the plan to address the sustainability issues identified.