Councils are Raiding Financial Reserves to Fund the Costs of Increasing Social Care Support, Report Finds
An increase in adult social care spending on provider fees and people receiving support has come at the cost of weakening financial health of English councils, The King’s Fund’s annual ‘Social Care 360’ report has found.
The King’s Fund found that residential care provider fees paid by councils rose in real terms by an average of 3.6% to £1,823 a week for working age adults and for older people by 3.3% to £1,019 a week compared with 2023/24’s figures. Homecare fees rose 3% to £23.56 an hour. This has come alongside councils now providing many more people with care.
An additional 30,000 people received publicly funded long-term care in 2024/25 compared to the previous year, representing a 3% rise from 859,000 to 889,000.
It has meant that total spending on social care by local authorities reached £34.5bn, a real terms increase of 4.1%.
However, it has resulted in the rise of external debt and fall in usable reserves as councils attempt to cover these increased costs whilst meeting their statutory obligations. The Chartered Institute of Public Finance and Accounting (CIPFA) found that last year English councils external debt rose by 10% and their usable reserves fell by 4%.
Councils are also having to fund spending on social care through increases in charges on service users and cuts in other areas such as libraries, roads and waste disposal.
Even with these measures, half of councils with social care responsibility say they are likely to have to apply for emergency government bailout agreements within the next three years, according to a Local Government Association survey.
And despite the increase in fees, and expanding the number of people receiving care, the report finds that social care providers are struggling to meet their rising costs and charging privately funded clients more to help make ends meet.
The King’s Fund’s ‘Social Care 360’ report said that ‘The picture for social care remains precarious’ and that it would put ‘significant pressure on the government to ensure stability in the sector in the medium term and on the Casey Commission to identify coherent proposals for funding and wider reform in the long-term’. This is the eighth edition of the report published annually by The King’s Fund, tracking the state of the social care sector each year.
Simon Bottery, author of ‘Social Care 360’ and Senior Fellow for Social Care at The King’s Fund, said: ‘Local authorities have gone to great lengths over the past year to fulfil their statutory obligations. They have spent more money on social care, with that investment not just going towards the increase in provider fees but also expanding the number of people receiving care.
‘This will have improved the quality of life for the thousands of additional people now in receipt of care and given the challenging financial backdrop should be welcomed. However, it has come at great cost to local authority budgets and ultimately is not sustainable.
‘We are long overdue a national conversation about how to properly reform social care so that it provides the support people need is organised and is funded in a way that does not put at risk other local authority services and their overall financial health.’
