On Monday 9 January, the government announced an extra £200 million funding for hospital discharge, the latest of several recent updates from the government relating to adult social care (ASC) funding.

These wider announcements in recent months include:

• Two other ASC Discharge Funds (three in total, together worth £1.3 billion)
• £562 million ASC Market Sustainability and Improvement Fund (incorporates the original £162m Market Sustainability and Fair Cost of Care Fund)
• Wider Local Government Finance Settlement 2023/24 updates (from 19 December 2022)

This briefing will first explore these three areas before discussing the overall implications of the recent updates regarding adult social care funding.

ASC Discharge Funding

Since November across England, there has been £1.3 billion in Discharge Funding announced across three different grants and for distribution in separate ways.

Of this £1.3 billion, just under £189 million has been allocated for London, representing 15 per cent of the total for England. The three Discharge Funds are as follows:

• November 2022 ASC Discharge Fund
• January 2023 Discharge Funding for step down care
• Local Government Finance Settlement (LGFS) ASC Discharge Fund 2023-24

November 2022 ASC Discharge Fund- £500m

The November 2022 ASC Discharge Fund for £500 million constitutes half of the overall £1 billion ASC discharge funding for England. Half of this £500 million was intended for release in late 2022 and half for release in January this year.

There are no specific requirements against the spend on this fund, other than that it should be directed towards activities which speed up patient discharge and free up hospital beds.

Method of allocation by local authority area

£200 million of the £500 million was distributed using the ASC Relative Needs Formula:

• The formula used to allocate this £200 million is the same as the ASC Relative Needs Formula used since 2013/14 (which is based on 2001 Census data)
• This £200 million was distributed to local authorities as a section 31 grant and then pooled into the local Better Care Fund (BCF) section 75 agreements, with integrated care boards (ICBs) to agree the distribution with agreement from local authority partners

£300 million of the £500 million was distributed using two different metrics:

• 25 per cent by weighted ICB population metric
• 75 per cent by discharge performance metric (which is flexed to reflect the size of the ICB weighted population)
• This latter metric calculates the allocations as “the ICB weighted population share weighted by the proportion of occupied beds with patients remaining in hospital who no longer meet the criteria to reside relative to the England population” (as found in the ‘Allocations’ section of the Addendum to the 2022 to 2023 Better Care Fund policy framework and planning requirements)
• This £300 million went directly to ICBs

Pooling to ICBs

It is relevant to note that, ultimately, all the funding from this £500 million ASC Discharge Fund was pooled to ICBs. As a result, it is not a fund which can be directly traced back to local authority spend. Some local authorities may have received more assistance than others through this overall £500 million, depending on the decisions of the ICBs regarding spend of the fund.

Nevertheless, there are advantages to this fund in that the criteria around the spend of the £500 million are more flexible than the subsequently announced £200 million ASC Discharge Fund (to be discussed below) and it also carries less stringent reporting requirements – fortnightly compared to daily.

January 2023 Discharge Funding – £200 million

The ASC Discharge Fund worth £200m was the latest set of ASC funding, announced at the start of 2023 (9 January). The distribution by local authority area is based on a weighted ICB population metric and the funding goes directly to ICBs.

As per the government guidance, the scope of usage of this fund is specifically to buy short-term care placements to allow safe discharge into the community from hospital. ICBs should book beds most suitable for patients’ needs and the fund can pay for stays of a maximum of four weeks per patient.

There are several key points of note around this new Discharge Fund, which are relevant when understanding the challenges that its usage may pose to local authorities.

Deadline for usage of the £200 million

Based on the current guidance, the additional £200 million fund has a spend deadline of 31 March 2023. Given that the eligible packages of care can be up to four weeks long, this would imply that any packages of care which start after 1 March 2023 will need to start being funded out of the local authority’s main adult social care budget once the 31 March deadline has passed (if they are still ongoing after this date).

Consequently, it seems that care packages can only be arranged against this fund up until the end of February, if a local authority wants to ensure that all packages are fully funded through the £200 million fund and not through their general adult social care budget. This would seem to greatly reduce the timeframe for using this fund, unless local authorities continue to arrange packages through the month of March 2023 which could in turn create significant budget complications.

Reporting

Another complication of this new £200 million Discharge Fund is the reporting requirements which it entails. Whereas the separate Better Care Fund involves a yearly data return and the original £500 million Discharge Fund requires a fortnightly data return, it was announced on 17 January 2023 that this latest fund demands daily reporting from local authorities (SitRep completion).

There are concerns over the impact that these stringent reporting requirements could have on uptake of the fund and on local authority capacity if they proceed with its usage. Daily reporting constitutes a significant administrative burden which could conflict with the purpose of creating more capacity to unblock hospital beds. If local authorities do not use all the fund as a result, it will be important that this is understood to be due to the complications it entails rather than due to a lack of need for the funding.

LGFS ASC Discharge Fund 2023/24

This part of the overall national £1.3 billion ASC Discharge funding pot means £300 million for local authorities was allocated through the Local Government Finance Settlement announced on 19 December 2023, which will be discussed in more detail in a later section.

This £300 million which goes to local authorities is distributed using the same methodology as the improved Better Care Fund (iBCF) and must be pooled as part of the iBCF. An additional £300 million was allocated to ICBs, representing £600 million in total for the whole of England (£89.8 million across London).

Fair Cost of Care and Market Sustainability work

Another key area of note in terms of adult social care finance is around the implications of the Market Sustainability and Fair Cost of Care work. The newly announced fund for this work for 2023/24 is instead called the ASC Market Sustainability and Improvement Fund (£562 million as per LGFS 2023/24). £162 million of this has been rolled on in relation to continuing the Fair Cost of Care work in 2023/24.

By 27 March 2023, all local authorities must submit a final Market Sustainability Plan following engagement with providers to develop a shared understanding of local care costs. Councils were able to resubmit their care costs data up until 1 February 2023 and the government guidance on Market Sustainability and Fair Cost of Care Fund 2022 to 2023 was updated with a revised version of 'Annex C: market sustainability plan template' also on 1 February 2023.

Among other key conditions of receipt of the Fair Cost of Care funding, local authorities must:

• Submit Cost of Care exercises
• Submit a spend return detailing areas of spend (at least 75 per cent of funding for 2022/23 expected to be to increase fee rates paid to providers, as detailed under ‘Eligible Spend’ in the ‘Appropriate use of funding’ section of the Market sustainability and fair cost of care fund 2022 to 2023: guidance)
• Focus on the sustainability of the 65+ care home market and the 18+ domiciliary care market

Commentary

Fair Cost of Care work

Whilst the Fair Cost of Care work represents one of the first steps towards the government’s 10 year vision in the People at the Heart of Care white paper, the delays to the adult social care charging reforms (from October 2023 to October 2025 instead) mean that the market sustainability work is now happening in isolation rather than alongside the wider charging reforms. This work was intended to prepare local authorities to support greater numbers of people (due to the intended £86,000 care cap), yet this cap has been delayed by two years, as called for by both London Councils and the LGA.

The result has been that the Fair Cost of Care work has now created expectations among care providers that councils will be able to pay higher rates for care. However, there is concern that the £162 million which has been rolled on in the form of the new ASC Market Sustainability and Improvement Fund to continue this work in 2023/24 will be insufficient. It is also unclear as to how much of the ASC Market Sustainability and Improvement Fund (worth £562 million) should be spent on the Cost of Care work, and whether this overall funding pot may be insufficient for the market sustainability preparation needed as a whole prior to October 2025.

Local Government Finance Settlement – wider analysis

Whilst there are concerns over the funding pots discussed so far, the overall allocations for adult social care within the LGFS 2023/24 announced on 19 December 2022 were better than anticipated. This followed on from the positive announcement of the delayed ASC charging reforms in October 2022.

One of the areas of uplift is around the Social Care Grant, which increased from £2.3 billion in 2022/23 to £3.8 billion for 2023/24. Of this, around £1.3 billion was badged as extra funding compared to previously. Nevertheless, it should be noted that this extra funding is repurposed from the funds originally intended for the ASC reforms, so additional funding for these reforms will now be needed in time for their introduction in October 2025. There is currently a lack of clarity on when and where this funding for the charging reforms will come from might come, if not in the LGFS 2024-25.

Another point of note on the Social Care Grant, which London Councils has previously raised, is that whilst it is distributed using the ASC Relative Needs Formula, it may also be spent on Children’s Social Care instead of Adults’. This means that the London region may lose out on funding through allocations of this Grant, as it may be spent on children’s social Care despite its allocation in terms of adult social care needs (which are lesser than children’s when compared to England as a whole – London has a 25 per cent share of Children’s RNF compared to a 15 per cent share of Adults’ RNF). London would receive around £153 million more in 2023/24 if the ASC and CSC weightings in the formula used were equal.

Finally, the LGFS saw an extra £300 million for local authorities in terms of the ASC Discharge Fund (as discussed above) and an extra £400m which went into the new ASC Market Sustainability and Improvement Fund (also discussed above). However, the government’s statement that there was further additional funding for adult social care beyond this relates to the additional 1% in ASC precept flexibility for 2023/24.

Due to the fact that this is a local choice which will be impacted by the overall financial position of local areas and their needs, this may not represent a viable funding option in all areas and will carry wider implications if taken up. Therefore, the additional new funding for adult social care which the government announced in the settlement is slightly less than the headlines would suggest.

Concluding thoughts

In conclusion, the latest position on adult social care finance in local government would seem to be mixed. The extra funding announced in the LGFS 2023/24 in terms of the repurposed ASC charging reform spend, the new £300 million Discharge Fund for local authorities (alongside an additional £300 million for integrated care boards) and the extra £400 million for Market Sustainability are all positive developments which may help local authorities manage intense budget pressures in the short-term, especially when coupled with the delay of the charging reforms.

However, while some challenges may have lessened in the short-term, the backdrop of new or developing issues within social care is equally notable. Among these, as discussed, are the challenges posed by an increasing expectation of higher care fees by providers, as well as concerns about whether current and future funding for the introduction of the charging reforms will be sufficient. Coupled with inflationary pressures and increasingly complex caseloads, the difficulties would appear to be numerous.

Additionally, regarding the latest £200 million ASC Discharge Funding specifically, the timescale restrictions, reporting requirements and spend limitations which it entails could result in local authorities having a greatly reduced ability to take advantage of this fund. This could send out a message that further funding is not required, when the reality is that local authorities may not have enough administrative capacity to fulfil the conditions of its usage. There is also the fact that in some cases, reablement may be a more suitable option for discharged patients than being placed in a care home setting.

It would seem, therefore, that recent adult social care finance developments are likely to provide short-term assistance without offering any longer-term solutions. Without clarity on longer-term funding and solutions, it will be difficult for local authorities to commission any longer-lasting solutions to the problems it currently faces and any expectation of additionality through recent funding is unlikely to be realistic.

However, local authorities can continue to share best practice and use the most recent funding injections as they see best. It will be of great importance for the sector to unite in its call on the government to plan long-term measures to ease the pressure on adult social care finances and enable longer-term commissioning for a more sustainable future.