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Market Sustainability Plans for Residential and Nursing Care 65+ and Home Care 18+ (2023)

Section 1: Revised assessment of the current sustainability of local care markets

a) Assessment of current sustainability of the 65+ care home market 


  • We have a large care home market in the city, but the overlap of commissioning with the county means the combined city and county market size is smaller than might be expected (see fuller explanation below Market size). 
  • A significant concern is the decrease in the number of beds in nursing care – this number has fallen by more than a third in the last three to four years. There is now significant concern around capacity.
  • Workforce pressures are being felt by residential and nursing care homes, but it is being most acutely felt in nursing care.
  • We have many beds in smaller, independently run care homes, which may be more susceptible to rising costs and other issues such workforce. We are now seeing a pattern of these smaller homes exiting the market, which suggests our market composition is changing. This needs closer scrutiny as overall growth is lower than that of our regional comparators.
  • We have a large and buoyant residential home market, which means we can meet demand; most placements are made at our local authority usual rates and occupancy levels are good. However, in line with our strategic aims to help people be more independent we also need to review our policy and approach in relation to ‘extra care’.
  • We are concerned about the quality of care and are looking at the best ways to support our care homes.
  • What is clear is that there is no single ‘true’ cost of care, for many reasons (room size, facilities, location in the home etc), costs can vary substantially between care homes, even those near to each other.

Sufficiency of supply

Leicester has a mix of residential and nursing care homes, with a small number providing Asian lifestyle services. There are relatively few nursing homes in the city and the county and geographical coverage is poor. This has implications for people’s choice.  

Below is the makeup of the care home market for people aged 65+ in Leicester: 

  • Number of older people’s homes: residential – 37
  • Number of older people’s homes: nursing – 10
  • Number of older people’s homes: total – 47
  • Number of older people’s beds: residential – 1,298
  • Number of older people’s beds: nursing – 475
  • Number of older people’s beds: total – 1,773
  • Average occupancy levels, 2022 to date: residential – 87.5%
  • Average occupancy levels, 2022 to date: nursing – 88.3%
  • Average occupancy levels, 2022 to date: total – 87.6%
  • Average occupancy levels, 2021-22: residential – 82.8%
  • Average occupancy levels, 2021-22: nursing – 80.9%
  • Average occupancy levels, 2021-22: total – 82.3% 

Market size

In terms of market size, per head of elderly population, the city has the fourth largest older people’s care home market of all councils in England. By contrast, the older persons’ care home market in Leicestershire is almost 20% smaller than the national average per head of population. As the county is much larger than the city in terms of population and absolute care home market size, it means the combined market size is smaller than might be expected. This is important to note given the commissioning of beds within the city overlaps the county.

Residential care sufficiency

Helping people to live more independently has been a strategic ambition for Leicester City Council for several years and continues to be one of the key priorities of our all age commissioning strategy. However, despite having a relatively young demographic in the city, in relation to our East Midlands neighbours, Leicester City Council commissions the second highest number of residential care home placements per head of population, for adults aged 65 and over. This is compounded by relatively low levels of home ownership in the city (52% according to the Office for National Statistics data), but also by a lack of alternative care settings. Our Extra Care schemes (both current and in the pipeline) tend to focus on people aged 18+, rather than being specifically aimed at supporting our older population. Nonetheless, while they do offer an alternative to residential care, there is an opportunity to revisit our policy and approach in relation to the demand associated with an ageing population, given we have such a small extra care/’housing with care’ market. There are just two schemes (135 beds) specifically aimed at older people which the city council has nomination rights for, and three other ‘housing with care’ schemes providing 118 beds – these are operated by a mix of either social landlords or by landlords offering apartments at market rent in the city. Done in collaboration with the market to ensure sustainable occupancy levels are maintained, this could support more choice and outcomes for our older citizens.

Given we have a large market for residential placements, currently we can meet needs, with only 3% of Leicester City Council placements commissioned outside of Leicester and Leicestershire area, most likely due to client choice. The delays to the market reforms in this context could provide an opportunity to consider our approach to residential care in the city, in advance of any potential impact when the government’s social care reforms come into place.

Nursing home sufficiency

In stark comparison, the situation for nursing home care is more complex. Since 2014, we have seen a 39% reduction in nursing home beds following the closure of six nursing homes (including five in the last three years), and another four care homes staying open but deregistering for nursing care. No existing care homes in Leicester registered for nursing care in this time. This has serious implications for Leicester and Leicestershire, as well as the wider system we are a part of and points to a serious capacity issue, which needs to be both understood and addressed. 

Commissioners are aware that nursing capacity can be volatile, with periods of sparse capacity often followed by a recovery in nursing bed availability. It can be also difficult to ascertain the true capacity of nursing beds, given most homes are registered for both nursing and care. 

However, with recent closures and de-registrations, combined with low levels of FNC-eligible placements, a drop off in CHC-funded placements and low levels of city council commissioning the true demand may have been suppressed for some time. While the 10 remaining nursing homes in Leicester and the handful in Leicestershire appear to be meeting demand if the market shrinks much further, our ability to meet our demand could radically change. Given our market position for nursing, key aspects of the adult social care reform pose much greater risks to Leicester City Council as a council. The delay, therefore, provides some much-needed time for us to work with partners to implement system solutions. 

In relation to diversity, while we are seeing new care homes enter the market, marking a small net growth in total registered bed capacity, 0.5% from 2014 to June 2022, their business models are focused on the more complex end of the market, specialising in either neurological rehabilitation or the self-funder market. In practical terms, this growth in capacity is well below that for the East Midlands (4.8%) as a whole. The other significant change in the market was the closure of the five council-run residential homes between 2014 and 2017. This means we are looking very closely at provision to ensure we can continue to meet demand. The table below shows the proportion of beds commissioned by the city, the county, local NHS and self-funders and others (such as other councils or integrated care boards). It demonstrates how our market is supporting placements from across a variety of sources, not just our own residents. 

Funding source

  • 2022 year to date (65+ care homes), total occupancy: 1,631

LA Funded 

County LA 














Levels of diversity in the market

Care homes in the city vary in size. However, the city also has many beds in smaller homes, which are likely to be independently run. Homes of this size are more likely to be affected by higher staffing and other costs because they lack economies of scale. One benefit of this is that they offer more choice for potential residents, as they give greater geographical coverage, as seen in Leicester.

The quality of current services

There are an increasing number of care homes in Leicester that are requiring more support from the local authority and we are looking at how best to support our care homes to address issues around quality and performance.

Current fee rates paid, how services are currently commissioned and impacts of inflationary pressures

Placements in our care homes are currently purchased on a person-by-person basis. Care homes hold a core specification and contract. Although we have a range of pricing bands, the average actual weekly fee rates being paid for 2022/23 (as reported under our Annex A submission) were: 

  • Residential care 65+ (non-nursing): £764 
  • Nursing: £754 (excluding FNC) 

Under the ‘fair cost of care exercise’, we collected significant operational data through our surveys, and this data has also been extensively analysed by Care Analytics (a company that specialises in the financial analysis of services in adult social care). This has also included some important regional benchmarking data, made possible because all East Midlands councils, bar one, used Care Analytics to undertake our ‘cost of care’ exercises. The wider market information has also underpinned some analysis of key cost drivers in delivering care and subsequent price inflation implications across the region for 2023/24.  

What is clear is that there is no single ‘true’ cost of care. For many reasons (room size, facilities, location in the home etc), unit costs can vary substantially between care homes, even those geographically close to each other. Inflation forecasts are, therefore, based on local intelligence and a combination of other factors, including the 9.7% increase in National Living Wage (NLW) and the high levels of inflation experienced across the wider economy. 

Among our East Midlands councils, the cost of care exercise indicates that Leicester’s usual fee rates sit in the middle of the range of rates paid for both residential and nursing care and, in at least 75% of placements made, these are the rates we have paid. When we look at this data, excluding third party top ups (TPTU) in residential care, 95% of placements are at our usual rates. This suggests we have both a strong TPTU policy, but also a good market situation, which allows for such a policy to be implemented. However, levels of increasing complexity and/or economic factors are resulting in more additional needs allowance payments, which is driving higher overall payments. The data shows that, since 2016/17, we have experienced larger increases in our mean prices compared to other councils in our region, for both residential and nursing care rates. Some important work is now needed around the following: 

  • How many new placements are being made at our usual rates (some of our group providers are introducing flat rate fees, which are much higher than our usual rates, in some cases higher than the suggested cost of care median rates. Policy needs to be developed in relation to these requests.)
  • The data around CHC and FNC low levels of funding is stark. Clarity is needed around the impact on council rates and, ultimately, care for people in our area.
  • What additional allowances in place constitute and whether those payments are an economic payment (to meet price expectations of the market) or one that is related to need.
  • Care management practice in relation to men and woman. We have high proportions of woman aged 65 and over in our care homes (64%). In line with our strategic ambitions, we will look proactively at how to support older women to continue to live independently.

In relation to delivering a fee rate change that reflects the cost of care in our area, our plan is to address the current inflationary impact on costs and invest further in our market(s), using identified resources set aside by the council for adult social care provision, complemented by the allocation of funding from government through the Market Sustainability and Improvement Fund (MSIF) grant. We aim to achieve this in the following ways: 

  • Through Care Analytics, we have commissioned some additional work to further support our understanding of what commissioned rates should cover for residential and nursing care in Leicester. 
  • In the meantime, Leicester City Council has used the market intelligence acquired from the cost of care exercise, along with the detailed inflation data produced by Care Analytics, to model inflationary increases for our fee rates for 2023/24.

Applying this level of uplift (on the back of the Market Sustainability and Fair Cost of Care Fund allocation from 2022/23) will see the council commit all the additional funding allocated through the government. Careful consideration will need to be given to the ongoing pace of change towards any new commissioned rates. 

The table below sets out Leicester City Council fees and charges for 2022/23, for residential and nursing care:

Cost categories


2022/23 rates


Rates anticipated for 2023/24


Comparison to Cost of Care median values (as of April 2022)


*Mental Illness/Drug & Alc (BAND 2)





Dependent older people (BAND 3)





*Learning Disability (BAND 4)





Highly Dependent OP (BAND 5)





Residential Nursing Band (excluding FNC)





*Rates for bands 2 and 4 included for completeness, but sit outside the cost of care exercise, as people placed under these categories are predominantly working age adults. 

Whether the current market conditions support development of the workforce, whether there are recruitment challenges such as a high level of staff vacancies or staff turnover rates

Recruitment and retention remain a significant challenge for our care homes. High turnover of staff remains an issue, so retention is a key area of work for our care homes, both nursing and residential. Another key issue is the number of nurses who work in nursing homes who will reach retirement age in the next 10 years, and the difficulties of recruiting into these roles. Turnover in these roles is particularly high (48.3%), alongside a general vacancy rate of 9.4%. This is, therefore, an area we are working with our nursing homes to target.

b) Assessment of current sustainability of the 18+ domiciliary care market


Leicester City Council commissioned Care Analytics to support its ‘fair cost of care’ work and its commissioning review in readiness for procurement of new home care contracts in 2024. A large amount of valuable data has been received which informs this market sustainability project, our market position statement, our home care commissioning review, the fee setting process, our all-age commissioning strategy and our workforce strategy. We have also used Office for National Statistics data, Skills for Care data and Care Quality Commission (CQC) data, along with intelligence from our routine engagement with providers and their staff, information from people who use services, our discussions with our staff, other councils, linked work on supported living, and workforce and condition-specific strategies. What we have learnt from undertaking this exercise is also being applied to our approach for other services – notably care homes for under 65s, supported living and day services. 


Analysis of the data shows that we are in a fortunate position; our care market is sufficient to meet growing demand – the market has experienced strong growth which is well supported by our current commissioning practices. Our current fee rates can support the market and detailed analysis of business costs shows that Leicester is amongst the most efficient in the region. At least in part, this relates to the council achieving the combination of competition in the market and larger home care branches, which can offer efficiencies in factors such as back-office staffing and so on. 


Our major challenges relate to: recruitment and retention of staff; ensuring any increases in fees to providers which encompass increases to wage rates and associated terms and conditions, such as travel time and costs, are passed onto care workers; reducing the number of zero hours contracts used; meeting the growth in demand for support, particularly double handed care and nursing oversight of complex care; ensuring that services are culturally appropriate to meet the increased demand from the South Asian communities. 

Engagement with providers 

We have engaged (and continue to engage) with our providers through several regular home care forums, our commissioning review engagement strategy and a specific meeting with home care and care home providers to discuss the results of the fair cost of care exercise. As part of this exercise, Care Analytics gathered a large amount of intelligence from providers about recruitment challenges, demand pressures, cost and other pressures in the delivery of care in our local market. 

The levels of diversity in the market

As of 1 February 2023, there were 167 home care providers registered with CQC in Leicester. Of these, the council commissions 31 (18.5%) on its framework contract. 

Of the council-commissioned work, five providers provide 51.5% of all the hours, while the remaining hours are picked up by the other 26 providers. All providers pick up all types of packages, but one provider specialises in 24-hour complex care, another specialises in care for the Somali community, a third provider has many Gujrati speaking staff, and two other providers specialise in double-up packages. 

The commissioning review shows that the 21 providers who deliver support to the highest number of people, have a mix of clients with both a white British ethnicity and those with an Asian ethnicity. However, some providers clearly support a greater number of one of these two high-level ethnic groups. Such patterns may have as much to do with the locations in which providers mostly operate, as much as any type of cultural specialism. 

The market is a mixture of large, medium, and small organisations, both owner-operated and franchised. We have seen the market develop with small local providers setting up to meet specific local needs. The council has been keen to work with such providers to support their competence to deliver quality care.  

Our commissioning analysis shows that almost half of the large branches in the East Midlands, delivering more than 2,000 hours per week, are in Leicester. The number of micro (less than 250 hours per week) and small (250 to 499 hours) providers are comparatively few in Leicester. There is also a low turnover of providers, with only a small number leaving the market and a small number of new ones each year. 

The largest 10 (of 31) contracted providers, as of April 2018, continued to deliver a significant number of hours. Seven of the 10 providers exhibit the typical pattern of mature homecare businesses, which is to seek to maintain a steady state and focus on profit maximisation, once their preferred size has been achieved. 

As part of our commissioning review, clients of our providers were plotted on a map which shows that all geographical areas in the city have many providers delivering home care for the council. It also shows that a large proportion of clients are heavily concentrated in two clusters, either side of the train line, just to the north and east of the city centre. These density of these two clusters means a large proportion of carers can walk or cycle between clients, enabling efficient runs to be arranged. 

Sufficiency of supply to ensure continuity of care

Capacity in the market is high and trends over the past years echo the current position.   

During 2021/22, 139,634 hours of care were delivered by contracted providers – an increase of more than 70% since 2018. The annual spend on commissioned packages in 2021/22 was £20m. Three providers have left the framework since April 2022. There has been a 23% growth in client numbers since April 2018. Despite this substantial level of growth, capacity is maintaining pace with demand – a snapshot check (1 February 2023) revealed there were no packages awaiting placement. This is a regular occurrence and waiting lists of any significance (fewer than 35 people) were only experienced during the Covid-19 period and additional suppliers were procured at that time to mitigate any short-term lack of capacity. 

The marked growth in hours implies that the council’s commissioning structure is effective, otherwise it would not have been possible for the market to grow to meet such a large increase in demand. We are exploring why there has been such a marked increase in growth. Initial thoughts are that changes in commissioning practice (less residential care), an increase in people’s needs, the transfer of CHC funded cases to adult social care and a greater awareness among family carers that support is available to them (a priority in our carers’ strategy).  

Some areas of the city take longer to fulfil packages, these tend to be: the city centre, where staff do not live, most staff walk rather than drive and car parking is difficult to find; outlying areas bordering the county, where staff may be attracted to work for providers seeking Leicestershire County Council’s higher fee rates; and smaller packages, where travel time becomes a greater factor. 

The market is stable and, at times of need, such as during the pandemic, we set up additional emergency contracts using procurement flexibilities because of Covid-19 to support framework arrangements. New entrants to the framework, when it was last opened in April 2021, quickly grew to a position where they have become sustainable organisations delivering significant hours. 

The Care Quality Commission (CQC) is frequently registering new providers which contact the council seeking work. Together with the existing contracted and non-contracted market, this gives confidence that there is a sufficiency of supply. There is also a low turnover of providers, with only a low number leaving the market and a higher number of new providers each year. 

The quality of current services

The non-contracted market used by direct payment clients is large, although the number of clients is fewer than commissioned package clients. We are aware that we need to apply a greater focus on the direct payment market to improve the quality of care and support delivered and this will be supported by our future commissioning intentions. 

Of our contracted providers, 93% are rated by CQC as ‘good’ and the remaining seven per cent as ‘requires improvement’. This is better than the national (87%), East Midlands and sub regional provision (82%) comparators. Presently we have no major contractual concerns with the contracted market. The council supports contracted providers through its quality assurance framework, a provider forum, recruitment, retention and marketing support, and free learning and development offers. 

We need a greater understanding of, and offer support to, the non-contracted providers and this will initially be developed by implementing provider forums. The non-contracted market is already included in our information offer. We recognise we need to have a greater understanding of our non-contracted market and there are plans to do so as part of our commissioning review. 

Current fee rates paid and how services are commissioned

An open framework contract, jointly commissioned with the NHS, has been in place since 2017, expiring in 2024. The framework has been opened three times during this period to admit new providers. Twenty providers gave additional capacity during the Covid pandemic through the procurement flexibilities available at that time. This arrangement has now ended. The hourly fee rate ranges are:  

  • Lot 1 (general care, 99.5% of provision): between £17.32 and £18.40 per hour  
  • Lot 2 (complex care): between £17.32 and £19.20 per hour 
  • The recent cost of care exercise identified a median fee rate of £18.51.  Further analysis of the underlying cost data is currently being undertaken to support a revised position on commissioning rates for 2023/24, looking forwards towards the framework re-procurement exercise. 

Although current fee rates are lower than those offered by the neighbouring county council and are below the average for the East Midlands, providers have been able to deliver major increases in capacity in recent years. 

The rate is calculated using recognised methodology and ensures legal compliance with employment legislation. It is reviewed annually and is increased in line with inflation. 

Once each provider is on the framework, price is not a consideration in the allocation of homecare packages. This is reflected by the data from our commissioning review, which shows that the providers that have grown the most in recent years have a range of hourly rates. Providers with comparatively low hourly rates have been able to grow their businesses substantially, which indicates the hourly rates paid to these providers are ‘sustainable’, given the current ways these providers operate and are supported by the fee uplifts each year, which reflect cost inflation. 

In addition, the growth in the market strongly implies that we are paying sufficiently high rates to ensure sustainability of provision (in the local context), with the caveat that some providers may be aligning their business model with the fee rates available. 

Whether the current market conditions support development of the workforce, whether there are recruitment challenges

The latest data analysis shows about 8,820 staff are delivering hands-on care across the city, with a turnover rate of 21.2% and a 9.3% vacancy rate. The data tells us that 64% of those leaving home care remained in the care sector, while more than 100 international staff have been recruited by 17 providers using the government’s sponsorship scheme.  

Current challenges identified are the high turnover rate, high vacancy rate, the rising cost of living impacting further on recruitment and retention, and competition from other sectors, such as retail, hospitality, logistics, the NHS, and local authorities. There is a shortage of nurses, which impacts upon some services. Care is not seen as an attractive career for many, such that younger people are not entering the sector and there is an ageing workforce. 

The impact of current inflationary pressures on stability and sustainability of the market, including the potential impact of national living wage (NLW) increases, in April 2023, on provider stability

Providers report being negatively impacted by current economic pressures, and we have supported them during 2022/23 by offering a hardship fund offering one-off payments to meet extraordinary/exceptional costs. Ten home care providers applied for support. No provider has been noted as vulnerable to cost pressures. 

The current work on fee rates for 2023/24 takes account of national living wage requirements, as well as the current rate of inflation. We plan to set increases to rates paid which not only reflect the identified inflationary pressures on costs, but also include further investment of funding to further support market sustainability, drive improvement in quality and assist with other pressures, such as workforce capacity and retention – these being some of the fundamental objectives to be delivered through the MSIF.  

Applying this level of uplift (on the back of the Market Sustainability and Fair Cost of Care Fund allocation from 2022/23) will see the council commit all of the additional funding allocated through government to support with any need to increase fee rates to close any perceived cost of care gap in an area. Careful consideration will need to be given to the on-going pace of change towards any new commissioned rates.   

How delays to charging reform have impacted our ability to manage current pressures to market sustainability

The data received from Care Analytics shows that there are low numbers of self-funders in the city, so the effect of these people subsidising the market is thought to be minimal. However, we need to do more work on understanding the size and composition of the private homecare market as it is an important question for our market management, particularly in the context of pending adult social care reform.

Section 2: Assessment of the impact of future market changes between now and October 2025, for each of the service markets

65+ care homes market 

Nursing capacity (high risk)

At 104.1 beds per 1,000 of the population aged over 75, Leicester has 24% more registered beds per head than the average for the East Midlands (83.7), and 30% more beds than the whole of England (80.3). However, this belies the low proportion of nursing beds which, per 1,000 of the population aged over 75, accounts for only 31% of all beds in older adult care homes across the city and the county. This coincides with low numbers of people eligible for both FNC and CHC funded by our local integrated care board. When combined with low levels of commissioning by Leicester City Council, this has important implications for the continued sustainability of our nursing sector. The continued decrease in the number of beds, within what is already a small nursing sector, is a concern.

Quality of care (high risk)

Over recent years, we have seen a downturn in quality of care in our care homes, such that the proportion of homes assessed as ‘requires improvement’ is higher than the national average. The change in ratings, not just in Leicester but across the East Midlands, has been so dramatic that the local ADASS branch has commissioned an examination of the data to determine why the CQC data for the East Midlands area is so out of step with that of other areas and England in general. Key lead officers from Leicester City Council are supporting this work, alongside East Midlands CQC inspection managers to better understand and respond to the challenges in quality being seen in our local providers.

Changes in market composition (medium risk)

In Leicester, we have a much higher proportion of smaller, likely to be independently run businesses, or smaller group providers. Their buildings tend to be older, less energy efficient and require greater investment to maintain them. This may mean our market is more susceptible to the impact of rising costs, and/or owners retiring and families being unwilling to continue with the business. So, between now and 2025, we could see more care homes exit the market. Unless we see new care homes entering the market that are willing to accept council placements, this could leave the us unable to both meet any growing demand.

Workforce (high risk)

Attracting the right workforce and retaining them is a key priority. We have undertaken several actions and have a final draft of a workforce strategy which will ensure we are supporting our care homes – and our wider adult social care market – with sustainable actions. The ability to attract nurses into adult social care remains a key priority and we continue to work with our universities and acute trust to find ways of either attracting nurses via placement schemes or through ‘grow your own’ initiatives, such as the nursing associate's programme. 

Residential capacity within the market (low risk)

At present, we can meet demand for placements, though we recognise we have an opportunity to look at options for developing ‘extra care’, as a way of providing people with extra choice. Additional joint commissioning around ‘discharge to assess’ is helping to make sure we can meet the needs of people after a stay in hospital, likewise for those who need more culturally competent care.

18+ domiciliary care market 

Workforce supply (high risk)

Recruitment and retention within the home care sector is a significant challenge, with providers losing staff to other jobs which pay similar rates, but without the responsibility that caring brings. There is a shortage of clinical staff to provide oversight of complex care. The workforce is an ageing one, with more leavers than new recruits. Demographic forecasts show that, within the mid to longer term periods (after 2025), there will not be enough working age adults to support the increase of elderly people needing care and support. 

Cost pressures (medium risk)

Providers have highlighted the impact of rising costs of living on businesses and staff as a concern. Insurance premiums and sundries, such as office rental and supplies, have increased. For staff who are drivers, the high price of fuel is problematic. PPE continues to be expensive. Recruitment costs are high. Providers cite Covid-19 and Brexit as having had a huge impact on business costs.

Undersupply of care (low risk)

Providers indicate they have significant additional capacity. There are minor challenges in relation to providing care in some inner city and outlying areas, as well as at peak times of the day (breakfast, lunch and teatime calls). Evening and weekend calls often require the provider to pay a financial enhancement. 

Diversity of provision (low risk)

The mix of provider models promotes a relatively stable cross section of organisations. The market can meet the growth in demand for support, particularly double handed care and services that are culturally appropriate to meet the increased demand from the South Asian communities. 

Quality of care (low risk)

The quality of care compares well with provision nationally, and regionally. 

Section 3: Plans for each market to address sustainability issues, including fee rate issues, where identified, and allocation of funding so far

Summary of targeted funding to address stability for our care markets: 65+ residential and nursing and 18+ Home Care

2022/23 allocation (£1.06m)

Leicester City Council complied with the requirements of the funding conditions supporting its allocation of funds under the Market Sustainability and Fair Cost of Care Fund 2022/23. We received an allocation of £1.06 million from this fund. Under the conditions of the fund, a minimum of 75% needed to be used to increase fee rates paid to providers, in respect of residential and nursing care for those aged 65 and over, and domiciliary care for those aged 18 and over.  

The city council has allocated nearly 77% of the funding available to contracted care providers across these qualifying markets. Of the funding paid out, 69% (around £565,000) has been directly used to support fees for contracted providers of 65+ residential and nursing care and 31% (around £252,000) to support fees of contracted domiciliary care providers to promote market stability across both markets as well as responding to extraordinary cost pressures brought about by the high levels of inflation in the economy. 

2023/24 allocation (£3.685m)

The current work on fee rates for 2023/24 takes account of national living wage requirements as well as the current rate of inflation. Care providers, particularly in the residential and nursing care market, have cited significant cost pressures because of unprecedented levels of inflation across the wider economy – requests for a level of inflationary uplift vary, but are significant.  

Using the market intelligence acquired from the cost of care exercise, as well as the detailed inflation data produced by Care Analytics to model inflationary increases for our fee rates for 2023/24, we plan to set increases to fee rates which aim to: 

  • cover the identified inflationary pressures on costs  
  • provide further headroom in the fee rate (supported through the adult social care Market Sustainability and Improvement Fund) to further support market sustainability, drive improvement in quality and help with other pressures such as workforce capacity and retention – these being some of the fundamental objectives to be delivered through the fund.   

Applying this level of uplift (on the back of the Market Sustainability and Fair Cost of Care Fund allocation from 2022/23) will see the council absorb all of the additional funding allocated through government to support with fees across its adult social care markets, noting that the MSIF has a wider remit than just the 65+ care home and 18+ domiciliary care markets. 

During 2023/24 in preparation for 2024/25

The medium-term plan is to set future commissioning rates that are reflective of the outcomes of the cost of care exercise. The pace of change will be governed by the level of future government funding made available to support councils in this process, along with prevalent economic factors driving costs and associated market pricing. 

a) Addressing sustainability issues – 65+ care homes market 


Immediate to short term 

  • We will continue to work with our providers of nursing care to understand opportunities for developing and protecting our nursing provision, including those that have deregistered, to see if there is an opportunity to reverse their decisions.
  • We are supporting a review into the low levels of funded nursing care (FNC) and continuing health care (CHC) in Leicester, Leicestershire and Rutland.

Short to medium term 

  • There will be a careful review of our commissioned rate for nursing (currently lower than our band five) to ensure it does not threaten the continued viability of our remaining nursing homes. 
  • We will review care management and brokerage practice in placing people with residential care needs in dual registered homes. 
  • Our work with our local universities and acute trust will continue around recruitment support to encourage nurses into adult social care. Likewise, we will aim for better understanding of staffing ratios and their impact on quality, because of how we are placing people. 

Longer term: We will be working with local developers and providers to stimulate supply.  


Short to medium term 

We will work with our providers to encourage a diverse offer to meet people's needs and maintain their independence. This includes: 

  • Encouraging culturally competent care that reflects the diversity of our communities. This is reflected in our market position statements. 
  • Continuing the work we are doing around workforce to support recruitment and retention.
  • Supporting our system wide care home sub-group with their work to promote and commission (research and piloting of) tech-enabled care.
  • Ensuring we have robust commissioning intentions that better understand and support:

Long term 

We will be working with local developers and providers to stimulate supply of alternative models of care that include home care and nomination rights within local ‘extra care’ (current and pipeline).  

Quality of care

Short to medium term: Alongside strengthening our arrangements for people, families, and professionals to report any concerns and continuing the work we are doing to support the review commissioned by the Association of Directors of Adult Social Services (ADASS), we will also: 

  • develop a series of workshops to offer best practice guidance and resources for all regulated providers.
  • Continue our programme of quality assurance visits and reactive visits to assess the quality of care in our regulated services, acting as needed in relation to the findings from these visits, or where CQC inspection reports highlight failings.  

Furthermore, we will use the findings to inform the programme of free training and support we provide to our external providers. 

b) Addressing sustainability issues – 18+ domiciliary care market 

Workforce supply (high risk)

Short to medium term actions 

These include: 

  • We have commissioned Inspired to Care until 2025 to deliver support to providers with recruitment, retention, marketing, and development opportunities. The organisation leads social media and other communications campaigns that we participate in. 
  • The city council’s employment hub and the Leicester and Leicestershire Enterprise Partnership offer business support. 
  • We are linked in with regional, sub-regional and local multi-agency workforce partnership groups, such as the Leicester, Leicestershire and Rutland Workforce Retention group. 
  • We continue to commission free training and development through the Leicester and Leicestershire Social Care Development Group. 
  • The city council offers a bike lending scheme which can be accessed by care workers. 
  • During the winter months, we funded providers to pay bonuses and retention payments to care workers. This proved to be successful and it is something we will consider replicating in future years, should funds be available. This also helps market capacity to support hospital discharge initiatives. 
  • The council is participating in a regional bid for government funding to support additional overseas recruitment. Some providers are sourcing overseas workers for home care with a relatively healthy flow of applicants. If successful, this should take effect in 2023. 
  • A Workforce Strategy (2023-2028) for the external workforce is in its final draft. This seeks sustainable solutions to recruitment and retention issues. 
  • A tech-enabled care strategy is being finalised and rolled out. Technology is available through the council’s in-house service. Co-Bots are being piloted to support the reduction of double handed care. 

Longer term actions 

We will work with the sector on ongoing marketing and recruitment campaigns to attract and retain the right staff. 

Cost pressures (medium risk)

Short to medium term 

Significant cost pressures are already built into the city council’s fee setting process, which takes into account cost of living/inflationary pressures. Additionally, the key assumptions around drivers of cost within our local cost model have been reviewed alongside the findings of the cost of care exercise to ensure that, where sensible synergies can be made between the two pricing models, these are reflected in our local model. Government funding received through the Market Sustainability and Fair Cost of Care Fund (2022/23) and the adult social care Market Sustainability and Improvement Fund (2023/24) have been, and will continue to be, passported through to providers. Work done by Care Analytics has shown that our payment rates and commissioning practice are effective. 

We are examining our commissioned support payment rules to ensure our practice does not inadvertently disadvantage care workers, for example, rounding down hourly payments or adversely affecting a provider’s business model (return on operations), as this has been raised by providers during our engagement. 

The contractual arrangements for support are being reviewed to understand how we can stipulate new contractual terms around requirements for care worker pay, mileage rates, or other terms and conditions (such as those stipulated in Unison’s Ethical Care Charter). If possible, these will come into play in our new arrangements from October 2024. 

Longer term actions 

We will work with the market to help them find solutions where economies of scale might be employed, such as joint purchase of PPE, sharing of premises and back-office solutions.

Diversity of provision (low risk)

Short, medium and long term 

The mix of provider models promotes a relatively stable cross section of organisations. The market can meet the growth in demand for support, particularly double handed care, as well as services that are culturally appropriate to meet the increased demand from the South Asian communities. We will ensure our market shaping work continues to support the development of local providers who can meet the needs of local communities. The increase in packages of care requiring double handed support will be kept under review and providers informed of this increase. We will signal these factors (and other relevant ones) through our market position statement, which is published on our council website. 

Medium term 

We will set up a non-contracted provider forum to support the development of this market. It will enable us to promote topics such as quality improvements, learning and development. 

Recommissioning of home care

Short term 

A review of the model of commissioned home care with the following priorities identified is well underway to support new contractual arrangements from October 2023:  

  • a sustainable market with capacity to support predicted growth and complexity in people requiring support, quality services that are focused on outcomes. 
  • using strength-based approaches to safely support throughout. 
  • synergy with other Pathway 1 services with the NHS. 

The review will take into account changing demographics, for example, older people, fewer working age adults, more adults with learning disabilities, increasing complexity of needs and the results of the fair cost of care exercise. 


Short term 

We are piloting different ways of working ahead of recommissioning, for example, providers using a strengths-based approach to adjust packages of care and increase capacity (trusted assessors), reviewing the approach to more outcome-focused contract management – time banking and use of technology and equipment, such as Co-bots. The facility to retain this approach will be included in our new commissioning arrangements. 

Supporting hospital discharge

We work closely with the council’s hospital transfers team and rehabilitate, reable and recover (RRR) service to support discharge. All providers are contracted to pick up hospital discharge packages within two hours of the patient being medically ready for discharge. In January 2023, we set up a specific waking/sleep-in night service to support fast track, step-down arrangements using block arrangements with one provider. Our existing contracts already allow for night-time care – and 24-hour care – to be commissioned where necessary, but it was felt a specific service working closely with wards and the hospitals transfer team would be of benefit. This is being monitored to inform future commissioning intentions.