The government today announced that local authorities in England will be given money to help pay more to adult social care providers from The Market Sustainability and Fair Cost of Care Fund.

To ensure the funding makes it from local authorities to care providers, the authorities are required to carry out cost of care exercises to improve understanding of how much it costs to provide care in their specific area, including assessing the various costs care providers face in the area.

The authorities must also ensure the care market in the area is sustainable and identify and increase rates where a fairer cost of care is needed, as well as spending no more than 25% of funding in year one towards implementation costs, to ensure remaining funding goes towards genuine increases in fee rates.

Health and social care secretary Sajid Javid said: “This is the beginning of one of the most comprehensive reform plans that this country has ever seen in adult social care. The Health and Social Care Levy will help fund reforms to social care and the NHS – ensuring everyone who needs support is cared for in the right place at the right time. For this to happen we need a thriving adult social care market and this will only be possible if providers receive a fairer cost for care.”

There will not be a set fee rate as the costs of providing care will not be the same across the country due to local market variations. During year one, local authorities will receive an extra £162 million, followed by £600 million in years two and three.

Minister for care and mental health Gillian Keegan commented: “We all want to know our loved ones are receiving the best care possible and we need a thriving care market to make this happen. This is the first step in our adult social care reforms to ensure a sustainable system fit for the future. By supporting local authorities to review the market and costs in their areas and providing funding to help ensure a fairer cost of care, we can turn our vision for social care reform into a reality.”

The Health and Care Levy is a UK-wide 1.25% National Insurance Contribution which will start from next month to help fund the NHS and adult social care.

The Market Sustainability and Fair Cost of Care Fund will help fund the care sector as part of the government’s aims set out in the People at the Heart of Care White Paper.

The government says the levy will provide more than £1 billion to help people live safely, independently and where they want to, and improve the use of technology, including housing improvements. The levy will also provide at least £500 million to develop and support the workforce, including hundreds of thousands of training places and initiatives to improve wellbeing for the adult social care workforce.