Council social care fee rises lag national living wage hike for third year running, providers report

Council fee rises for social care providers have lagged behind increases in the national living wage (NLW) for each of the past three years, providers have reported.

The research, carried out before the government’s autumn 2024 Budget added an estimated £2.8bn to the costs of adult social care in 2025-26, revealed that services were facing increasing workforce challenges.

The latest Sector Pulse Check, carried out from August to September 2024 by representative body Care England and learning disability provider Hft, was based on data from 206 organisations responsible for the care of 128,000 older people and people with learning disabilities and/or autism.

Council fees not keeping up with wage rises

It found that 85% of providers felt that local authority fee increases were not sufficient to cover last year’s rise in the (NLW), from £10.42 to £11.44 an hour.

This replicates findings from 2023, when 79% of providers reported that fee rises did not cover the impact of that year’s rise in the NLW, and 2022 – the first year that the survey covered both learning disability and older people’s providers – when 81% of respondents reported the same.

The average care worker wage among the providers surveyed (£12.10 an hour) was 8.1% above the equivalent figure in the 2023 survey (£11.19 an hour), compared with a 9.8% rise in the NLW over the same period.

Recruitment squeeze

Alongside the reported squeeze on fees, 91% of providers listed workforce-related costs as among their top three financial pressures, up from 81% in the 2023 survey, with 86% citing pay as a key barrier to recruitment, the same proportion as in 2023.

Two-thirds of providers said they had seen a decrease or no change in the number of applications they had received from UK jobseekers in the past 12 months, down from 54% in the 2023 survey.

And while 55% reported an increase in applications from international staff over the previous 12 months, policy changes introduced in March 2024 – notably a ban on overseas social care staff on health and care visas bringing dependants to the UK – have squeezed the supply of staff from abroad.

Financial pressures easing

This year’s survey did reveal some improvements in providers’ financial position compared with 2023, including that:

• 29% of providers said they were in deficit in 2024, down from 40% in 2023.
• 26% said their surpluses had decreased, down from 31% in 2023.
• Use of agency staff fell to 7.8% in 2024, from 15.7% in 2023, despite the workforce pressures.
• 29% of providers said they had closed down parts of their organisations or handed back contracts to local authorities as a result of cost pressures, down from 43% in 2023.
• 9% said they were offering care to fewer people as a result of cost pressures in 2024, down from 17% in 2023.

Estimated £2.8bn bill from Budget

However, the survey was carried out before last year’s Budget announcement of a further 6.7% rise in the NLW and a significant increase in employer national insurance contributions (NICs), both of which will be implemented this April.

Think-tank the Nuffield Trust has estimated that these measures will cost providers an extra £2.8bn in 2025-26, with local authorities having to find £2bn of this in increased fees. The Association of Directors of Adult Social Services, meanwhile, has calculated an increased bill for local authorities of £1.8bn.

However, both the Nuffield Trust and ADASS figures far exceed the approximately £1.2bn in dedicated additional funding for adult social care that the government has allocated to councils for 2025-26.

Calls for sector funding boost and easing of migration rules

On the back of the latest Sector Pulse Check, Care England and Hft urged the government to:

• Fully fund the rise in employer or exempt care providers from the increase.
• Remove the ban on social care staff coming to the UK on health and care visas from bringing dependants.
• Introduce a multi-year funding framework for adult social care, with annual increases linked to inflation and increases in the NLW.
• Increase pay across the sector, over the long-term, in order to achieve parity with similar NHS roles.
• Introduce national standards for commissioning to tackle inconsistencies in local authority practices.

The survey results come with the government having announced the establishment of a commission, headed by Baroness (Louise) Casey, on long-term reform of adult social care, but faced sector criticism for deferring its final report until 2028 at the latest.

Delayed action ‘leaving more people without support they need’

Care England chief executive Martin Green said: “We are ready to work alongside Baroness Casey and the government to turn this commission into a catalyst for genuine change. But let’s be clear: the status quo is no longer an option. Every delay, every failure to act, pushes more care providers out of the sector and leaves more people without the support they need.”

The Local Government Association (LGA) issued a broadly similar message in response to the survey.

“Local authorities are under unprecedented financial pressure, exacerbated by inflation, rising demand, an increase in employer national insurance contributions, and workforce challenges,” said the chair of the LGA’s community wellbeing board, David Forthergill.

“We urgently need a long-term funding plan for adult social care, along with a workforce strategy that values and supports care workers. Without immediate government action, care services will remain at risk, with devastating consequences for individuals and families who rely on them.”