Care Providers set to receive boost with Local Authority’s paying a higher cost under new Government Guidelines

On 24 March 2022, The Department of Health and Social Care (“DHSC”) published new guidance outlining details on the Market Sustainability and Fair Cost Fund. This guidance outlines details on how the £1.36 billion in funding will be spent aiding the Health and Social Care sector in its recovery post COVID-19. The objective of the Government, explained in the Fair Cost of Care guidance, is to help local authorities pay a fairer rate of care to care providers. This is because previously people paying privately for adult social care paid a much higher rate than those who were funded by the local authority. This £1.36 billion fund supported by the introduction of the Health and Social Care Levy, aims to close this gap allowing local authorities to meet the objectives of the guidance.

How will the investment make it from local authorities to care providers?

The following measures were outlined in the guidance to ensure the investment makes it from local authorities to care providers. Local authorities must do the following:

  • Carry out cost of care exercises to improve understanding of how much it costs to provide care in their specific area, including assessing the various costs care providers face in the area.
  • Ensure the care market in the area is sustainable and identify and increase rates where a fairer cost of care is needed.
  • Spend no more than 25 per cent of funding in year one towards implementation costs to ensure remaining funding goes towards genuine increases in fee rates.

It was reiterated that there would not be a standard set fee rate. This is because the costs of providing care will not be the same across the country. It differs depending on location just as the cost of living does.

Health and Social Care Secretary Sajid Javid said:

“This is the beginning of one of the most comprehensive reform plans that this country has ever seen in adult social care. For this to happen we need a thriving adult social care market and this will only be possible if providers receive a fairer cost for care.”

The Market Sustainability and Fair Cost of Care Fund will increase support available towards the adult social care sector as part of the Government’s 10 year vision for reform set out in the “People at the Heart of Care” White Paper. This will help tackle underinvestment in the sector and other operational issues such as staffing and sustainability.


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