Cost Models in Social Care

The following was written by Equal Care's Treasurer Vivek Nanda during our research to create the cost model within this playbook.

In section 4.31 of Care and support statutory guidance - GOV.UK it says:

"When commissioning services, local authorities should assure themselves and have evidence that contract terms, conditions and fee levels for care and support services are appropriate to provide the delivery of the agreed care packages with agreed quality of care.

This should support and promote the wellbeing of people who receive care and support, and allow for the service provider ability to meet statutory obligations to pay at least the national minimum wage and provide effective training and development of staff. It should also allow retention of staff commensurate with delivering services to the agreed quality, and encourage innovation and improvement.

Local authorities should have regard to guidance on minimum fee levels necessary to provide this assurance, taking account of the local economic environment. This assurance should understand that reasonable fee levels allow for a reasonable rate of return by independent providers that is sufficient to allow the overall pool of efficient providers to remain sustainable in the long term.

It goes on to cite three cost model tools as "helpful as examples of possible approaches:"

• UKHCA Minimum Price for Homecare

• Laing and Buisson toolkit to understand fair price for residential care

• ADASS paying for care calculator

Each of these tool point to the leading suppliers of cost models that the UK Government is signposting to local authorities.

The Homecare Association

The most detailed and free source of information is the latest incarnation of “UKHCA Minimum Price for Homecare”, which can be found here.

Using the calculations published by the Homecare Association for the last few years for the National Living Wage and the London Living Wage allows us to see the minimum level of prices that should be charged by an organisation providing a social care service in Yorkshire and London:

This shows that wages of Care Workers have been held below the rate at which other costs have been increasing, with their share of total costs decreasing from 44% in 2019-20 to 41% in 2023-24.

LaingBuisson

The most expensive report at £1,495 or more can be found at Homecare and Supported Living Market Report - 5th Edition - LaingBuisson.

The fifth edition of LaingBuisson’s Homecare and Supported Living UK Market Report is indispensable reading for anyone involved in this fragmented and complex market. Written by leading market commentator, William Laing, during the winter of 2022/23, the report includes fully updated data and market insights that accurately portray how the market has developed in the past 18 months following the Covid-19 pandemic.

The new report shows the value of the UK market for homecare and supported living to be £11.5 billion (2021/22) and estimates that around 670,000 people are in receipt of homecare or supported services in the UK. These services, together, represent a strong intermediate step on the ‘ladder of care’, and are becoming more prominent as pressures on councils’ social care budgets see some care receivers shift from care home care to community-based homecare or supported living. The report also includes the findings of new research into ‘tech’ innovations that support the homecare and supported living sector, and social care generally. With the Covid-19 pandemic accelerating digitalisation across the sector, this has provided opportunities for tech-enabled independent sector providers to diversify and expand into a more central and more profitable role in integrated care systems.

What the report covers:

• Market

• Politics and Regulation

• Payors

• Major Providers

• Investors

• Staffing

• Market Potential

ADASS (Association of Directors of Adults Social Services)

ADASS and Surrey County Council developed a tool for modelling the additional costs of care to Local Authorities arising from the Care and Support Bill in 2013/4 as the Care Act 2014 was going through Parliament. The Care Act 2014 aimed to overhaul the 60-year-old legislation regarding social care in England. An overview of the model can be found here.

A user guide for using the model can be found here.

As the implementation of this act has evolved, ADASS has continued to support Local Authorities with the financial implications. The most recent initiative by the UK Government has been to set up the Market Sustainability and Fair Cost of Care Fund 2022 to 2023 in order to help Local Authorities increase the pay of care staff and reduce the number of people with unmet needs. In order to receive their share of this fund, the government has required councils to undertake a ‘Cost of Care’ exercise with their local care providers and to publish the results on the 1st of February, 2023. The cost of care reports and market sustainability plans for most local authorities can be found at Cost of care reports and market sustainability plans by local authority - GOV.UK

These show that the median prices paid by Hackney Council are just 2% higher than those by Calderdale Council, and both are below the Minimum Price calculated by the Homecare Association for London and the rest of England: