Research and analysis

Market Sustainability and Improvement Fund (MSIF): provider fee reporting 2024 to 2025

Published 7 October 2024

Applies to England

Main points

This is a report on the average fees paid by local authorities to external care providers during the 2024 to 2025 financial year, and the extent to which they have increased. Local authority feedback indicates that the Market Sustainability and Improvement Fund (MSIF) and wider local government financial settlement has enabled significant uplifts to average fee levels in 2024 to 2025.

Over 85% of local authorities stated that they increased the average fees that they pay to external providers of home care, care homes without nursing for clients aged 65 and over, care homes with nursing for clients aged 65 and over, supported living, care homes without nursing for clients aged 18 to 64, and care homes with nursing for clients aged 18 to 64.

On a weighted average basis, local authorities reported the following increases in fee rates when compared to 2023 to 2024:

• home care - an increase of 6.5%
• care homes without nursing for clients aged 65 and over - an increase of 6.3%
• care homes with nursing for clients aged 65 and over - an increase of 6.1%
• supported living - an increase of 6.4%
• care homes without nursing for clients aged 18 to 64 - an increase of 6.0%
• care homes with nursing for clients aged 18 to 64 - an increase of 6.6%

Introduction

Adult social care provides support for older people and working age adults with personal and practical care needs, as well as support for their carers. In England, adults may be cared for informally by family, friends and neighbours, or formally through services that they or their local authority pay for. Publicly funded adult social care is means tested and primarily funded through local government. Those with eligible needs, assets of less than £23,250 and low incomes, can receive help towards their care and support costs.

Adult social care currently makes up the largest area of discretionary expenditure for local authorities. To help address the pressures of an ageing population with increasingly complex care needs, increasing demand from younger adults who need support and rising care costs, additional dedicated funding for adult social care has been made available to local authorities in recent years. This funding has included:

• adult social care support grants
• investment to ease NHS winter pressures
• the adult social care precept (flexibility to raise Council Tax)
• the Infection Control Fund and the Rapid Testing Fund
• the Improved Better Care Fund (iBCF)
• the Market Sustainability and Fair Cost of Care fund (FCC) and the Market Sustainability and Improvement Fund (MSIF 2023 to 2024 and MSIF 2024 to 2025)

This management information release provides data on fee levels and fee uplifts paid by local authorities to adult social care providers in the financial year 2024 to 2025. This information is reported annually by 153 local authorities with adult social services responsibilities, via a questionnaire collecting information as part of the fund’s wider reporting process. Collections before 2023 to 2024 were collected from 151 local health and wellbeing boards as part of the iBCF.

Fees paid to external care providers

While official unit cost data is already collated by NHS England through the Adult Social Care Finance Return (ASC-FR), it is published in the annual Adult Social Care Activity and Finance Report, usually 6 months after the end of the financial year it relates to.

This MSIF collection is of added value to ASC-FR because:

• it specifically relates to external care providers
• it is over a year faster because its data has been collected close to the start of the financial year (returns were required to be submitted by the end of 22 May 2024)
• it separates out supported living fee rates

Respondents were asked to provide provisional average fee rates for 2024 to 2025 versus comparable final data from 2023 to 2024. As part of this, local authorities were asked to restate or update provisional 2023 to 2024 data that they provided in May 2023.

For some local authorities, the final fee rates in this release for 2023 to 2024 are significantly different from the provisional fee rates collected in May 2023, with the final data suggesting significantly higher care home fees. Much of the difference will be due to the final 2023 to 2024 data covering the whole financial year (notably at a time of higher inflation), but some may reflect inconsistencies in reporting.

Differences between ASC-FR and iBCF data

Previous iBCF and MSIF reporting showed some inconsistencies with the corresponding ASC-FR reports. It is not yet possible to compare 2023 to 2024 data because ASC-FR data for that year will be published in October 2024, but some inconsistencies are likely due to differences in definition and purpose.

The MSIF return and the previous iBCF return ask respondents to exclude full cost clients (people who must fully fund their care because they do not meet the needs and means eligibility thresholds for local authority care, but who have asked the local authority to arrange their care on their behalf). This is because their fee rates may not be representative of those for local authority eligible clients.

For different reasons, the ASC-FR guidance asks respondents to include full cost clients. (Full cost clients are included in ASC-FR data because councils are interested in the social care outcomes achieved for such clients.)

The MSIF return and the previous iBCF return also ask respondents not to include any of their own overheads, as the focus is on the payments made to care providers.

Average fees and uplifts in 2024 to 2025

For each of the 6 fee types for which data was collected, most local authorities (over 85% in each case) reported that their average fees were increasing in comparison to 2023 to 2024.

Table 1 (below) shows that provisional average hourly fees paid to external providers of home care were £24.00 per contact hour in 2024 to 2025 (an average 6.5% increase on 2023 to 2024 final data). With respect to care homes without nursing for clients aged 65 and over, the average fee was £888 per client per week (an average 6.3% increase), and for care homes with nursing for clients aged 65 and over, the average fee was £1,027 per client per week, excluding NHS funded nursing care (an average 6.1% increase).

Table 2 (below) shows that provisional average hourly fees paid to external providers of supported living were £21.33 per contact hour in 2024 to 2025 (an average 6.4% increase on 2023 to 2024 final data). With respect to care homes without nursing for clients aged 18 to 64, the average fee was £1,692 per client per week (an average 6.0% increase), and for care homes with nursing for clients aged 18 to 64, the average fee was £1,396 per client per week, excluding NHS funded nursing care (an average 6.6% increase).

These increases compare with a 9.8% increase in the National Living Wage from £10.42 to £11.44 per hour in April 2024, and 3.8% CPIH (Consumer Prices Index including owner occupiers’ housing costs) inflation in the 12 months to March 2024 (the announcement of data collection). While wages are the largest cost for care providers, general inflation will affect their non-wage costs.

This release uses weighted averages that are consistent with the methods used by NHS England. Home care fees and uplifts are weighted by each local authority’s mid-2021 population aged 18 and over. Care home fees and uplifts are weighted by the 2022 to 2023 NHS England unit cost denominators (the number of weeks of care) for externally run care homes. A zero weight is assigned where fee or uplift data is missing.

Table B of the accompanying spreadsheet includes comments where councils have described other fee rate uplifts besides those in tables 1 and 2 below. Services that are mentioned include:

• day care
• shared lives
• extra care housing
• direct payments
• sleep-in rates
• respite
• crisis support
• outreach
• personal assistants
• individual service funds
• transport
• assistive technology
• community support

Some councils have included links to published rate tables.

The range of local authority responses in respect to the annual percentage uplifts submitted for each category is illustrated in the full local authority level data set in the accompanying spreadsheet.

Table 1: change in average fees paid to external care providers as at 2024 to 2025 (home care and age 65 and over)

Home care: £ per contact hour and care homes: £ per client per week	External providers for home care	External providers of care homes without nursing for clients aged 65 and over	External providers of care homes with nursing for clients aged 65 and over
Local authority average fee 2024 to 2025 (provisional)	£24.00	£888	£1,027
Local authority average fee 2023 to 2024 (final)	£22.56	£837	£970
Local authority average fee 2023 to 2024 (provisional)	£22.55	£804	£937
Local authority average % increase 2024 to 2025 (provisional)	6.5%	6.3%	6.1%
Local authority average % increase 2023 to 2024 (final)	9.6%	14.5%	13.2%
Local authority average % increase 2023 to 2024 (provisional)	9.6%	10.1%	9.6%

Table 2: change in average fees paid to external care providers as at 2024 to 2025 (supported living and age 18 to 64)

Supported living: £ per blended hour and care homes: £ per client per week	External providers for supported living	External providers of care homes without nursing for clients aged 18 to 64	External providers of care homes with nursing for clients aged 18 to 64
Local authority average fee 2024 to 2025 (provisional)	£21.33	£1,692	£1,396
Local authority average fee 2023 to 2024 (final)	£20.06	£1,598	£1,309
Local authority average fee 2023 to 2024 (provisional)	£20.06	£1,521	£1,253
Local authority average % increase 2024 to 2025 (provisional)	6.4%	6.0%	6.6%
Local authority average % increase 2023 to 2024 (final)	9.3%	14.5%	13.7%
Local authority average % increase 2023 to 2024 (provisional)	8.4%	7.6%	8.7%

Reasons why final fee rates for 2023 to 2024 were higher than provisional fee rates

Tables 1 and 2 show that the final care home fees for 2023 to 2024 are significantly higher than the provisional care home fees for 2023 to 2024. The following paragraphs summarise different reasons for this that are mentioned in table A of the accompanying spreadsheet.

The final fees for 2023 to 2024 were likely to be higher than the provisional fees because they cover the whole financial year rather than an initial budget or projection. This was a year in which inflation was still significant, albeit falling. Some local authorities experienced tight capacity, market forces and pressure from self-funders. For example, Greenwich said:

Some providers are reluctant to accept new placements at the set rates and as such, with every negotiation, we are increasing fee rates to support market sustainability.

Bexley said:

There is a lack of capacity in settings which can meet high-acuity needs, such as dementia nursing.

Rutland said:

The Rutland care market is dominated by self-funders, so providers will often prioritise these individuals because they can charge them higher market rates.

Some in-year increases in fees were made possible by the MSIF Workforce Fund. For example, Sunderland referred to the:

Use of MSIF Workforce Fund to pay RLW [Real Living Wage] for Home Care Providers at an additional 3.75% and additional 1% to residential / nursing care providers from 1st October 2023.

Southend-on-Sea said that the provisional 2023 to 2024 data:

was calculated before the [MSIF workforce fund]… [we] were able to pay the market higher rates throughout the year.

Increases in the complexity of need during the year resulted in some increases in fees. For example, East Sussex said:

We have seen an increase in complexity of need across client groups.

Norfolk said:

For 65+ bedded care, our fee levels have increased during the financial year with a prevalence of negotiated prices representing increased complexity of need.

Some councils changed their approach to commissioning during the year. For example, Sandwell reported that:

We undertook a fair cost of care exercise with the Supported Living Market (mainly LD providers) who had not been part of the original cost of care exercise in 2022/23. The outcome was an increase in standard rate funded by the MSIF fund.

Richmond upon Thames said:

The successful implementation of a Home Care Platform from 30th January 2023 has brought in a dynamic pricing mechanism linked to a providers price/quality score which is used to rank and award individual packages of care.

Warrington said:

WBC has recommissioned its Care at Home Service, this included implementing a more efficient geographical structure by aligning providers to specific zones within the town. This has reduced travel time and costs and allows for more walking routes whilst also freeing up much needed direct care capacity.

Some changes to fees were because councils had resolved errors in the earlier 2023 to 2024 submission. For example, some previously reported nursing rates included NHS Funded Nursing Care when they should not have done (for example Gloucestershire, Harrow and Liverpool), some previously reported rates were ‘standard rates’ rather than the average (St Helens), and other errors.

Lastly, care homes for people aged 18 to 64 can in particular relate to small numbers of people with varying needs, so changes in the group of people receiving care can significantly alter the fee rate (for example Dorset, Havering, North Northamptonshire, Oxfordshire and West Berkshire).

Acknowledgments

The Department of Health and Social Care (DHSC) would like to thank the 152 local authorities who reported the data which has been drawn on for this report. MSIF data collection is managed by DHSC.

About this data

Collection

Reporting for the MSIF was administered by DHSC. Local authorities submitted reporting returns on spreadsheet-based templates made available on GOV.UK. 152 returns were received out of 153, giving a 99% response rate in total.

See the MSIF: local authority reporting template for full details of the questions used for collection.

Data quality

The status of the data was assessed prior to publication. Although cleaning took place to exclude invalid returns, the data sets were not subject to additional quality assurance. Local authorities were not, for example, contacted for clarifications and corrections except where data was obviously invalid. Some local authorities do show high or negative fee rate changes that are at least questionable. In these cases, we have still published the data to ensure transparency, as it is difficult to determine which are incorrect and which reflect substantial adjustments. The ‘Voluntary compliance with the Code of Practice for Statistics’ section below contains further information on data quality and quality assurance as part of voluntary compliance with the Code of Practice for Statistics.

For some local authorities, the final fee rates in this release for 2023 to 2024 are significantly different from the provisional numbers collected in May 2023 and published in July 2023. Specifically, the care home fee uplifts are often higher. Much of the difference will be due to final 2023 to 2024 data now being available that covers the whole of the financial year, but some may reflect inconsistencies in reporting. To avoid inconsistency between reported fee rates and percentage uplifts, the template only allowed respondents to enter fee rates. Percentage uplifts were then calculated and displayed to the user.

Data analysis

DHSC carried out the analysis and data cleaning. The data underwent a series of basic validation checks to exclude any invalid returns. However, as noted above, further clarifications from local authorities were not sought. See the accompanying spreadsheet for the full local authority level data set.

Voluntary compliance with the Code of Practice for Statistics

The Code of Practice for Statistics was published in February 2018 to set standards for organisations in producing and publishing official statistics and ensure that statistics serve the public good.

This MSIF release is a management information release rather than an official statistics publication. This is due to the volume of qualitative comments collected and limitations in the quality assurance process. Nonetheless, where possible, attempts to adhere to the code of practice have been made, which are outlined below.

Trustworthiness: trusted people, processes and analysis

Honesty and integrity (T1)

MSIF data releases are managed by analysts and policy officials in DHSC. This involves the design of data collection tools and analysis.

Independent decision making and leadership (T2)

The work is governed by the DHSC Social Care Evidence team. It is accountable to DHSC’s Head of Profession for Statistics.

Orderly release (T3)

Access to the publication and its tables before public release is limited to DHSC staff involved in the production and the preparation of the release. We will follow the DHSC revision policy.

Transparent processes and management (T4)

DHSC has robust, transparent data management processes. All data is provided by local authorities who received notification that the data would be published. Data quality issues are clearly set out in this publication.

Professional capability (T5)

Analytical work is managed by professionally qualified and experienced analysts - professional members of the:

• Government Economic Service
• Government Statistical Service
• Government Social Research profession

Data governance (T6)

DHSC uses robust data collection and release processes to ensure data confidentiality.

High quality: robust data, methods and processes

Suitable data sources (Q1)

Data originates from the 153 local authorities in England who are responsible for providing adult social care services, with this collection achieving a 99% response rate (152 local authorities). The local authorities are ultimately responsible for the quality of their data, though the template clearly explains data requirements immediately above the data entry boxes. However, where the quality of data is unclear, the issues are clearly highlighted. Alternative national and official statistics are signposted where relevant.

Sound methods (Q2)

Data collection tools and processes are robustly designed and tested prior to use. The guidance, validations and questionnaire for the data collection have been refined over time. The approach to weighting is consistent with the Adult Social Care Finance Return from NHS England and the questions and guidance have been revised over time.

Assured quality (Q3)

While the data has been checked for obvious errors and quality assured by analysts in DHSC, further validation and triangulation with additional data sources has not taken place. As such, the release clearly states that the data is self-reported and highlights any limitations.

Public value: supporting society’s need for information and accessible to all

Relevance to users (V1)

Understanding how MSIF funding is being used is of significance to central government, local authorities and their partners, as well as in the public interest.

Accessibility (V2)

Officials have had access to the data prior to publication to monitor progress and the impact of MSIF. Findings derived from the data may therefore be used for operational purposes before publication in this data release. We have used accessible formatting to ensure the content is accessible to a wide range of users.

Clarity and insight (V3)

Data is clearly presented and explained, with suitable visualisations and underlying local authority level data sets made available.

Innovation and improvement (V4)

This data collection series started in spring 2017 (as part of iBCF reporting) and has been progressively refined. We will continue to do so. Beginning in 2023 to 2024, we extended coverage to supported living and to care homes for clients aged 18 to 64.

Efficiency and proportionality (V5)

Burdens on data providers have been considered and this data has been collected alongside other MSIF data. 

Accompanying tables

An accompanying spreadsheet is available to download alongside this release, containing local authority level data tables and cartograms.

Enquiries

For media enquiries, phone 020 7972 3272 or email [email protected].

For public enquiries and the responsible statistician, email [email protected].