Cost of care analyses show councils lack funding to pay providers fair price, warn directors

ADASS says funding settlement not enough to help authorities close gap between current and 'fair' fees for care, but provider leader says authorities must find the money

Image of files marked 'funding, projects, grants' (credit: Olivier Le Moal / Adobe Stock)
(credit: Olivier Le Moal / Adobe Stock)

Councils lack the money to move towards paying providers a fair price for care, directors have warned, in the light of government-mandated analyses of the costs of services.

The Association of Directors of Adult Social Services (ADASS) issued the warning after councils published the results of costs of care exercises they were required to undertake by the Department of Health and Social Care (DHSC) by 1 February.

These were designed to determine sustainable fee rates for home care services and care home provision for older people, and identify how far councils were from paying these.

This was the first step in meeting the DHSC’s ambition for councils to move towards paying providers a fair rate for care. Carrying out the exercise was a requirement for authorities receiving ongoing funding from a government grant designed to help achieve the aim.

Several councils have now published the results, based on analyses of data supplied by providers concerning their costs, broken down into areas such as staffing, premises, services and supplies and appropriate levels of profit. In several cases, these were carried out by external consultants, who validated the provider data against existing models for calculating the costs of care.

Significant gaps between current and ‘fair’ costs

A sample seen by Community Care showed significant gaps between the average costs calculated through the exercise and the rates currently paid by authorities:

  • One London borough reported average potential gaps of £308 to £375 per week in relation to care home fees and £4.31 per hour for home care;
  • A southern county identified a potential gap of £223 to £290 per week in care home rates though suggested this might be an overestimate.
  • A southern unitary authority calculated there was a gap £100 to 135 per week gap for residential care and a £0.59 per hour gap for home care but suggested there was no gap for nursing home fees.

Commenting on the exercises, ADASS president Sarah McClinton said: The cost of care exercises have been challenging and time consuming for councils and for those providers that responded. However, they have been valuable in enabling councils to further increase their knowledge and understanding of how those local care providers who responded operate, the costs they incur and the pressures they are facing.

Councils ‘lack funding to close gap’

But she added: What is most telling, however, is that local government does not have the funding available to move towards the calculated costs of care in any significant way.”

The DHSC had originally budgeted to provide councils with £600m in each of 2023-24 and 2024-25 to enable them to move towards paying a fair cost, but this has since been reduced to £162m per year, the amount it is providing in 2022-23.

This was as a result of the two-year delay made to the “Dilnot” charging reforms, including the cap on care costs, which the fair cost of care exercise was designed to support. The money for the charging reforms, and the resources released from the fair cost fund, have been recycled into a funding settlement that ministers have said would provide councils with up to £2.8bn in 2023-24 and £4.7bn in 2024-25 for adult social care.

Councils have questioned these figures since some of this is designed to be spent on children’s social care and another chunk is dependent on authorities raising the maximum permissible amount from council tax in each year – in most cases a rise of 5% per year.

The settlement is designed to enable councils to meet four pressures: delayed discharges from hospital, waiting times for care, care staff shortages and low fee rates – implying that at least some of the resource can go towards supporting a fair cost of care.

Settlement ‘inadequate’

McClinton said the settlement was not sufficient to help councils increase the rates they paid providers in real terms.

She added: “Councils have squeezed down prices paid to providers over many years. We are committed to increasing both the pay of care staff and to reducing the numbers of people with unmet needs.

“This requires long term sustainable funding and a work force plan.  Social care is a critical benefit to the individuals needing and drawing on it, to carers, to care workers and the wider economy.”

However, ADASS’s case was rejected by provider representative body Care England.

Councils ‘can no longer claim ignorance on care costs’

Its chief executive, Martin Green, said: “The costs of care exercise…clearly shows that local authorities are significantly underfunding care and we expect them to find the money to deliver a long-term and sustainable funding settlement. They can no longer claim that they are ignorant of the true cost of care, and they are going to have to make some tough decisions about prioritising higher levels of fees if they want to secure services.

“If you look at local authority expenditure, there is a lot of money spent in other areas and local authorities need to take tough decisions and prioritise the needs of the vulnerable people in their local communities. They cannot expect care providers to continue to deliver services without proper funding.”

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One Response to Cost of care analyses show councils lack funding to pay providers fair price, warn directors

  1. Chris Sterry February 8, 2023 at 6:24 pm #

    We all are aware, some more than others that Social care has been underfunded for many years, perhaps for all preceding years, but the austerity cuts imposed on Local Authorities (LAs) by Tory governments from 2010 and to the current day have made the underfunding much more.

    But all services funded by LAs have suffered since 2010 for effectively there aren’t any real savings to be made, so services are cut, many extremely. But LAs have been left to shoulder all the blame while most of the blame should be directed to governments, this current one and all preceding governments as social care has been left to flounder by all of them. This has led for many years for the crisis in social care to deepen over these years and, while this crisis in social care has been affecting the NHS for many years, now it is so much evident, it was before, but now so more so.

    The government offering a little here and a little there will have no effect whatsoever, so the government needs to do so much more.

    While the costs of care exercises the LAs were required to undertake by the Department of Health and Social Care (DHSC) by 1 February are welcomed these exercises should have been taken many years earlier. However, were or are LAs in a place to conduct this exercise, you will say that they should have been, but were they?

    I say this, has it has been my experience and many other family carers and providers in the social care sector that the Assessments of Needs undertaken by many LAs have not been done as fully as they should have been for some well-meaning social workers have been informing some families and persons with unmet needs that their LA will not be able to finance all of which is required and therefore no point in including it in the assessments. This then leads to LAs not being in full understanding of what all unmet needs there are, or try to persuade by, in some instances, causing guilt on families that they should be doing more. But in reality families are doing so much already and in many instances well more than they should to maintain their own health and wellbeing, which in many, if not all are the last they consider. For this caused much of my own late wife’s and my own health deteriorations and to many other families I am aware of.

    As at 2020 a saving of £193 billion (The value of unpaid care was estimated at £530 million per day and £193 billion per year during the pandemic (Carers UK, Unseen and Undervalued, 2020),

    That is a very substantial amount, but family carer costs savings are not included in the Assessment of Needs when it should be significantly, as should every unmet need, even if it is being met by the family.

    Unfortunately, I can’t see any improvements being made for this government and all preceding have not considered social care has an emergency service and not social care workers as being the skilled workers and extremely needed as they are. But then it comes to family carers, who are unpaid, except for the totally insufficient Carers Allowance,, which is not a benefit for caring but a small amount to try to compensate for any loss of earnings incurred while caring and then it is classed as a taxable benefit!!

    All care workers, social workers and all NHS workers so deserve to be paid more, but that is highly unlikely in the present climate.

    The state of social care is not sustainable and has it declines so does the NHS for without sufficient sustainable funding immediately for social care and then the NHS neither will survive, then our care will be much worse than Americas, perhaps that is the governments real intention.