The Fair Cost of Care

Over the next few years, Adult Social Care is changing.

Published in December 2021, the government’s vision for social care reform sets out a ten year plan for how people will experience care and support, to ensure that:

  1. People have choice, control and support to live independent lives
  2. People can access outstanding and tailored quality of care and support
  3. People find Adult Social Care fair and accessible

To help deliver the reform, the government’s Market Sustainability and Fair Cost of Care Fund was announced to support Councils to move towards paying providers a fair cost of care, and to prepare their local markets for the adult social care reform, such as the cap on care costs, which has now been delayed for at least a further two years.

As a condition of receiving this additional funding, local authorities were required to complete a fair cost of care exercise to arrive at a shared understanding with providers of the local cost of providing care.

For the purposes of the exercise, the Department of Health and Social Care (DHSC) consider 'fair' to mean the median actual operating costs for providing care in the local area (following completion of the exercise). 'Fair' also means what is sustainable for the local market.

The report of Newham’s 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 the guidance from the government this report is known as “Annex B”.

However, as part of the new administration’s Autumn Statement in 2022, it was announced that the charging reforms are being delayed by at least two years and the ring-fenced nature of the funding has been removed such that its use has now been broadened to cover increases to all Adult Social Care services. Following this update to funding, it is understood that the rates which Newham pay providers in the future will not directly and solely be drawn from the final figures of the fair cost of care exercise but instead, this will be one factor for consideration amongst others that will inform the fee setting process.

The Fair Cost of Care Exercise Reports (Annex B) can be read in the PDFs below. If you are a provider and have any questions, or would like to discuss further, please email the Adults and Health Commissioning Team.

London Borough of Newham Fair Cost of Care Exercise – Care Homes (Annex B) (PDF)

London Borough of Newham Fair Cost of Care Exercise – Domiciliary Care (Annex B) (PDF)


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. Ours will be published in March 2023.