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Adult Social Care Funding and Reform

Volume 705: debated on Thursday 16 December 2021

As set out in our adult social care reform White Paper, “People at the Heart of Care”, on 1 December 2021, the Government are committed to a wide-ranging and ambitious reform of the adult social care system.

To make social care fairer, we are protecting people from unpredictable care costs, are supporting local authorities to move towards paying a fair cost of care to providers and ensuring that more self-funders will be able to ask their local authority to arrange their care for them to give them a choice of better-value care.

To move us towards the 10-year vision for reform set out in “People at the Heart of Care”, the Government are today publishing the “Fair Cost of Care and Market Sustainability Fund: Purpose and Conditions for 2022-23”. This sets out how the Government will provide £1.4 billion over the next three years to support local authorities to prepare markets for reform and move towards paying providers a fair cost of care. This breaks down into £162 million in 2022-23 and £600 million in both 2023-24 and 2024-25.

Some local authorities are promoting efficient and effective operation of care markets, with sustainable rates of care. However, a significant number of local authorities are paying residential and home care providers less than it costs to deliver the care received. In many areas, this has resulted in higher self-funder fees which we are addressing by further bringing into effect section 18(3) of the Care Act 2014. The market effect of this change will be that some providers will over time need to reduce reliance on subsidising state-funded care from self-funders. This £1.4 billion will enable local authorities to ensure local care markets can respond to the changes reform will bring and will also help to address under-investment and poor workforce practices.

It is important this additional funding reaches the places and parts of the social care system that need it most. The Government propose to distribute 2022-23 funding on the basis of the adult social care relative needs formula, as is used for the social care grant. Local authority level allocations for 2022-23 have been published alongside the provisional local government finance settlement.

Today my Department is publishing a policy statement that sets out:

Funding conditions for 2022-23

As a condition of receiving further grant funding in the two following years, we will expect local authorities to conduct cost of care exercises, set out their plans for driving market sustainability, including progress towards a fair cost of care, and to report to DHSC on how funding is being used. The Department will use this information to monitor progress and provide public assurance that local markets are being managed successfully.

Practical guidance and support tools

From January 2022, we will work closely with the sector to develop a practical support offer for those local authorities who may require it to meet the funding conditions. This includes guidance and templates on cost of care exercises; workshops, webinars and market shaping tools.

The funding and conditions set out in this statement today are part of the new health and care levy announced in September this year, of which £5.4 billion is being invested into adult social care over the next three years.

We will work closely with local government to determine appropriate grant conditions, national guidance and distribution mechanisms for funding allocations in 2023-24 and 2024-25.

Beyond this additional £1.4 billion, we are proposing today in the provisional local government finance settlement to make available over £1 billion of additional funding for social care in 2022- 23.

Councils are not expected to rely solely on this earmarked funding to meet the inflationary and demographic pressures facing these services; they also have access to funding from unringfenced grant, including the 2022-23 services grant, and from council tax. The funding available to councils means overall local government core spending power will increase by over 4% in real terms in 2022-23, including the investment in adult social care reform.

Today’s publication is a further milestone on the Government’s journey to reform adult social care, creating a system that is fit for the future and of which we can all be proud.