Department of Health and Social Care
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Care providers to receive fairer costs for providing care

Local authorities in England will be supported to pay a fairer rate of care to adult social care providers.

  • Health and Social Care Levy will help increase rates paid to adult social care providers
  • Government guidance sets out how £1.36 billion will support local authorities to pay a fairer rate of care
  • Market Sustainability and Fair Cost Fund will help create a stronger and more sustainable adult social care market across England

Local authorities in England will be supported by £1.36 billion from the Health and Social Care Levy to pay a fairer rate of care to adult social care providers.

The Market Sustainability and Fair Cost of Care Fund will increase the support available for the 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.

People paying privately for adult social care often pay a higher rate than those funded by the local authority. This fund will help close the gap.

To ensure the investment makes it from local authorities to care providers the new guidance published yesterday sets out local authorities must:

  • 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

Health and Social Care Secretary Sajid Javid yesterday said:

This is the beginning of one of the most comprehensive reform plans that this country has ever seen in adult social care.

The Health and Social Care Levy will help fund reforms to social care and the NHS – ensuring everyone who needs support is cared for in the right place at the right time.

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.

There will not be a set fee rate as the costs of providing care will not be the same across the country due to local market variations.

During year one local authorities will receive an extra £162 million, followed by £600 million in years 2 and 3.

Minister for Care and Mental Health Gillian Keegan yesterday said:

We all want to know our loved ones are receiving the best care possible and we need a thriving care market to make this happen. This is the first step in our adult social care reforms to ensure a sustainable system fit for the future.

By supporting local authorities to review the market and costs in their areas and providing funding to help ensure a fairer cost of care, we can turn our vision for social care reform into a reality.

The Health and Care Levy is a UK-wide 1.25% National Insurance Contribution which will start from April 2022 to help the NHS and adult social care to recover and reform after COVID-19.

The Market Sustainability and Fair Cost of Care Fund, announced in December, is one of the first steps in the 10-year vision for adult social care. It is part of wider reforms that will help provide greater choice for those receiving care, increase opportunities for those providing it and ensure certainty over costs, both for providers and users.

As well as providing a fairer cost of care for care providers the levy will provide more than £1 billion to help people live safely, independently and where they want to, and improve the use of technology including housing improvements.

The levy will also provide at least £500 million to develop and support the workforce, including hundreds of thousands of training places and initiatives to improve wellbeing across the adult social care workforce.  Investment in workforce skills, wellbeing and career development will help to address the barriers to people taking up work in adult social care, and will make adult social care a more attractive offer. 

Local authorities will also benefit from the increased local government finance settlement helping them to support the care market to respond to the reforms required by the sector.


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