State-Funded Homecare Funding Gap Widens To £2.3 Billion Report Reveals
A new report from the Homecare Association reveals that councils across England continue to purchase homecare at rates far below the cost of delivering safe, regulated and legally compliant care, creating a funding gap of around £2.3 billion just to cover wages at the legal minimum for all working time and other running costs.
The report, Fee Rates for State-Funded Homecare in 2026-27, finds that the average council fee rate for homecare is £25.37 per hour, compared with the Homecare Association’s Minimum Price for Homecare of £34.42 per hour.
Not a single contract reported in the research met the Minimum Price, representing the lowest rate at which providers can meet their legal obligations to staff, pay for all working time including travel and waiting time, and cover the costs of running a regulated service.
The report also finds that:
• 61% of contracts paid less than the direct employment cost of a care worker receiving the National Living Wage.
• Fee uplifts averaged around 3.7%, below the 4.1% increase in the National Living Wage. Greater London had the lowest average fee rate of any region at £22.66 per hour, despite having some of the highest costs of care delivery.
• Councils and the NHS together would need to invest an additional £2.3 billion to fund sustainable homecare provision based on the National Living Wage, but this rises to almost £3.0 billion to bring care worker pay in line with an NHS Band 3 healthcare assistant with two or more years’ experience.
Dr Jane Townson OBE, Chief Executive of the Homecare Association, said: “The Government has set out an ambitious vision for adult social care, including a National Care Service, a Fair Pay Agreement and a stronger workforce. But these ambitions will remain out of reach if councils and NHS bodies continue to buy homecare below the cost of delivering it.”
“When commissioners pay less than the direct employment costs of care workers, providers are left with nothing to cover supervision, training delivery, recruitment, technology, insurance, and the other essentials required to deliver high-quality regulated care. The consequences are borne by care workers, providers, families, and ultimately the NHS.”
“Homecare helps people live independently, prevents avoidable admissions to hospital and supports timely discharge. Investing in homecare is one of the most effective ways to improve people’s lives while reducing pressure elsewhere in the health and care system.”
“Free care at the point of use must also mean fair funding at the point of delivery. If Government wants a National Care Service built on strong foundations, it must ensure commissioners pay a fair price for care.”
The Homecare Association is calling on the Government to provide immediate, ring-fenced investment to close the homecare funding gap, introduce a statutory minimum price for homecare, reform commissioning practices, and develop a fully funded workforce strategy.
