Social Care Crisis Looms as Unfunded Costs Threaten Access to Vital Services
The UK’s social care sector is facing a deepening crisis, with warnings that unfunded cost increases could lead to fewer people receiving the support they desperately need.
This stark message comes from the latest Social Care 360 Review, which highlights the urgent need for the government to avoid repeating past mistakes as it introduces new financial pressures on care providers.
The review, which analyses nearly a decade of data, reveals a troubling pattern: when care providers face rising costs—such as increases to the minimum wage and National Insurance contributions—they pass these costs on to local authorities. In turn, councils, struggling to balance their budgets, are forced to reduce the number of people they can support. This chain reaction has already had devastating consequences, with the number of people receiving long-term care falling significantly between 2015/16 and 2021/22.
The introduction of the National Living Wage in 2016 marked the beginning of this cycle.
While the wage increase brought much-needed improvements for care workers—many of whom were among the lowest-paid employees in the country—it also significantly raised operating costs for care providers. With wages accounting for the majority of their expenses, providers had no choice but to negotiate higher fees from local authorities.
Local authorities, legally required to balance their budgets, responded by reducing the number of care packages they could fund. Between 2015/16 and 2021/22, the number of people receiving long-term care fell from 873,000 to 818,000, with older adults disproportionately affected. The number of older people receiving care dropped from 587,000 to 529,000 during this period.
The cycle was briefly interrupted in 2023/24, when increased local authority spending power allowed councils to both raise provider fees and expand the number of people receiving care. However, this reprieve is under threat as new cost pressures loom.
This year, care providers face further financial strain from a significant increase in Employers’ National Insurance Contributions and proposed pay rises for care workers through a ‘fair pay agreement’. While these measures aim to improve working conditions and make social care more competitive in the job market, they also risk pushing providers to breaking point.
If the government fails to fully fund these increases, local authorities will once again be forced to make impossible choices. With core spending power already stretched after a decade of cuts, councils may have to ration care services or seek savings elsewhere.
Rory Deighton, acute director at the NHS Confederation, said:
“Social care provides vital support to hundreds of thousands of people across the country, so it is worrying to see this analysis suggesting that rising pay costs is leading to fewer people receiving support.
“The NHS also relies on the social care sector to help support people in the community and when they leave hospital. The health service has had a very difficult winter, with unacceptable levels of corridor care and long ambulance handover delays. Our members report that the financial and staffing problems in social care are a key factor in delays discharging medically well patients from hospitals, with around 13,000 beds taken up by patients who no longer need to be there.
“Health leaders and their teams are working hard to improve this with same day emergency care services, urgent community response programmes and wraparound care innovations.
“But NHS will not be able to improve urgent and emergency care performance until the challenges across social care are also addressed. This is why the NHS Confederation welcomes the upcoming Casey Commission into social care, with wholesale reform the only means to achieve the improved adult social care system that the NHS, and the country as a whole, needs.”
