How do you think the Budget will impact the social care sector?
- It will strain the sector further with cuts and job losses. (65%, 432 Votes)
- It's too early to tell. (22%, 146 Votes)
- It's a step in the right direction, albeit a small one. (13%, 83 Votes)
Total Voters: 661
Loading ...The £600m for social care announced in today’s Budget risks being swallowed up by wage and employer tax increases, leaving little or nothing to address spending pressures, sector leaders have warned.
Both council and adult care provider bodies sounded the alarm over the impact of next year’s 6.7% rise in the national living wage (NLW) – which will benefit many thousands of care workers – and increase in employer national insurance contributions (NICs).
Chancellor Rachel Reeves announced the measures today, alongside news that councils would receive at least an extra £600m in grant funding for social care in 2025-26. This was part of a wider grant package worth £1.3bn which, along with other revenue increases, would give local government a real-terms rise in resource of about 3.2% next year.
How £600m for social care measures up
The Treasury did not confirm whether the £600m was for adults’ services, children’s services or both, or how much extra resource councils will have available to spend on social care next year, notably through increases in council tax and the adult social care precept. These details will be set out in the draft local government finance settlement, due later in the year.
The extra £600m is worth about 1.5% of the £38.6bn councils have budgeted to spend on adults’ and children’s social care in 2024-25.
It also falls far short of the £3.4bn in additional pressures that the Local Government Association (LGA) has calculated councils will face in adults’ and children’s social care in 2025-26, compared with 2024-25.
Extra costs to sector from wage and tax rises
However, the Budget also brought significant additional costs for social care services, in the shape of the NLW rise, which will benefit many thousands of care workers, and the increase in employer NICs, both of which come into force in April 2025.
Under the latter – the biggest tax-raising measure announced by Reeves today – the rate employers pay will rise from 13.8% to 15% and the threshold of employee earnings at which firms start paying the tax will decrease from £9,100 to £5,000 a year.
The government has also set aside about £5bn a year to compensate public sector employers, such as councils, for the impact of the rise in employers’ national insurance contributions that comes into force next April.
However, the impact on councils specifically has not been set out explicitly by the Treasury, nor has any funding been announced to cover the measure’s affect on voluntary and private sector employers, including care providers, though the smallest businesses will be protected.
Extra adult social care costs ‘will almost certainly absorb £600m’
The LGA said that the NLW and employer NICs increases “will almost certainly absorb all of the [£600m] grant increase for many councils even if it is spent wholly on adult social care”.
This would leave “little or nothing to address immediate challenges in adult social care, such as long waiting times for an assessment of a person’s care needs or the commencement of care packages”.
Its chair, Louise Gittens, also questioned whether councils, in their role as employers, were being compensated for the rise in NICs.
“The government needs to give explicit clarity on whether councils will be protected from extra cost pressures from the increases to employer national insurance contributions,” she added.
‘Vital government fully funds wage rise for sector’
Though the Association of Directors of Adult Social Services (ADASS) welcomed the additional £600m, it delivered a similar message, with president Melanie Williams saying the extra funding “may end up getting used to cover employers’ national insurance increases and wage increases amongst providers”.
“Our last survey showed that councils overspent on adult social care last year by £586m, therefore it’s vital that government fully funds the increases in national living wage or it risks escalating financial pressures on adult social care further,” she added.
For not-for-profit provider body the National Care Forum, chief executive Vic Rayner said: “Even if all the £600m were to be dedicated to meeting the cumulative additional costs that social care employers will now face, it is unlikely to cover the required uplifts. This is before envisaging how hard this will hit people who pay for their own care, in a system desperate for reform.”
Budget ‘risks sending providers over the edge’
The Homecare Association, which represents domiciliary care providers, was also clear that the £600m was “nowhere near enough” and raised very significant concerns about the impact of the increased costs on providers’ ability to stay in business.
“The chancellor has increased costs for providers without providing enough funds to cover them,” said its chief executive, Jane Townson.
“Many small providers are already close to the brink, running on wafer-thin margins. These decisions risk sending many over the edge.”
She added that the association’s research had found that there was a £1.08bn deficit between commissioner fees in England and the amount home care providers needed to pay the existing NLW of £11.44, cover costs and turn a 5% profit.
Social care ‘struggling to cover basic costs’
Care England, which represents independent adult care providers, similarly warned that providers were already underfunded and that the £600m – which it presumed would also cover children’s services – was a “drop in the ocean”.
“We needed a bold step forward, a signal that adult social care matters to the fabric of our society,” said Care England chief executive Martin Green
“Instead, today’s announcement leaves the sector struggling to cover basic costs, pushing it further toward a point where both capacity and access will inevitably decline.”
The Voluntary Organisations Disability Group, which represents charitable providers, said the Budget “falls far short of the commitment needed to put social care on a surer footing”, while also increasing costs for the sector.
Impact of fair pay agreement for adult social care
Alongside the increase in the NLW and employer NICs, its chief executive, Rhidian Hughes, pointed to the increased costs to the sector from the government’s proposed introduction of a fair pay agreement for adult social care, through its Employment Rights Bill.
‘While the commitments to raise the national living wage and improve workers’ rights are of course welcome, the fact that plans, including a rise in employer national insurance contributions, remain unfunded, disregards the significant pressures already facing providers,” he said.
“Seventy per cent of charities are already under-funded for the services they are commissioned to deliver, with the vast majority of costs being staff costs.”
Strain on carers and organisations that support them
A similar message was delivered by the Carers Trust, in relation to the network of local carer support organisations it oversees.
“The [social care] system is broken, piling pressure on carers while the local carer organisations who support them are struggling to meet demand,” said its chief executive, Kirsty McHugh.
“The hike to employer national insurance contributions will see the operating costs of those carer organisations soar while local government remains squeezed, driving some to the brink.”
The British Association of Social Workers said the £600m for social care was “only scratching the surface of what’s needed”.
No mention of long-term social care reform
In one of its first acts in government, the party scrapped its Conservative predecessor’s plan to reform the adult social care charging system, including by imposing a cap on people’s liabilities for personal care, on the grounds that it was unfunded.
However, despite pledging to create “a national care service” – a term it is yet to define – the Budget included no reference to long-term reform of adult social care, a point that drew criticism from sector bodies.
Age UK charity director Caroline Abrahams said that “the seemingly endless wait for the far-reaching, fundamental reform and refinancing of social care that is so badly needed goes on”, adding that this was “heartbreaking for all the older and disabled people who need social care, and their families”.
For think-tank the Nuffield Trust, director of research and policy Becks Fisher said: “It is disappointing that today’s Budget does little to stabilise the beleaguered social care sector in the immediate term, and that the supporting rhetoric made no mention at all of the future reform it so desperately needs.”
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Perhaps if the knee jerk reaction of sector ‘leaders’ to modest increase to the minimum wage and long overdue increase in employer NI contributions wasn’t horror that they might have to pay dividends in line with their profits rather than top load their debt further on the back of exploiting staff and residents we might get a sensible discussion on how to improve social care in the round. But we won’t. ADASS has no interest in that discussion unless it starts from the parameters demanded by providers.
You clearly have very little knowledge of the small independent homes fighting for survival. The majority of care home owners work incredibly hard and have invested a lot of time and money for little return.
Actually I have direct interest let alone knowledge of the small providers which is why I also know that the hedge fund, debt fueled providers are detrimental to those too. Care providing corporations can easily absorb more than these, for them, extremely modest, increases. The ‘Leaders’ are not talking on behalf of small independent providers, they are of no interest to them. They are lobbying on behalf of corporate providers who they use the most and to whom they are literally hostages. Let us hear from them that these two increases will impact disproportionately on small independent providers. If they ever do I’ll comment appropriately to what they might say.
What about the not for profit providers? My daughter lives in a care home, run by charity, set up originally in Victorian times by a wealthy philanthropist. This budget has increased their costs by £1 million at a stroke. My guess is, based on the fact providers like Leonard Cheshire have started telling LAs, they would have to find another placement for a resident, after refusing to pay any uplift for inflation in their fees since say 2015, that LAs and ICBs will similarly refuse to increase their payments to cover these increased staffing costs. The end result will be cuts to the care and services, vulnerable people with complex needs, who already have almost nothing, will receive.
I have not read of any ring fencing for this £600 million for LAs, to make sure it goes to domiciliary care agencies and care homes, to cover these increased staff costs.
I support increases in the NMW, but believe it should have been funded by tax increases in a progressive tax system, not vulnerable people with complex disabilities.
96% of Leonard Cheshire income comes from the government and other official agencies. Donations have been reducing and fundraising costs are more likely to at best match what’s raised and more likely to be more than what’s raised. The highest paid employee earns between £230-230k. When you rely on the government mostly it begs the question whether other than in law you are actually a charity. I accept it’s a risk making a judgement on headline information but I think there is a serious lack of vision on what charitable endeavours should be post the scramble to appoint CEOs and Finance Officers to make those organisations more business like. It’s not just a Leonard Cheshire problem.
I’m a Social Worker employed on a lower wage, for a Children’s Charity. The work can sometimes be difficult, but very rewarding, and the excellent ‘work life’ balance (unachievable in statutory) was my compromise in lieu of better pay (but worse working conditions) at a local authority, where I would be required to do 25+ additional hours in unpaid overtime to keep up with an unmanageable caseload. Today, I found out I had lost my job, due to the budget handed down by Labour, and in the charity needing to make cuts to all expenses deemed not essential. I did not vote labour – or conservative, but independent, as they are both liars, and to be trusted. I feel more betrayed by Labour, as they won the election based upon a lie, and a complete overall lack of honesty, integrity, and transparency. We have elected politicians, who live a life of wealth, privileged, and austerity; whilst the vulnerable, elderly, & working class are expected to foot every bill going, and work for free. As for social work as a profession, we are wanting, needy, and in lack, but we have nobody to blame, except ourselves, as for years we have put up with and taken this nonsense, and still nobody wants to strike and fight for our rights. Social Work I will no longer work for you – Not in my name.
I absolutely agree with Pam. Labour has ruined everything.
This country will only go downhill 🙁
It’s time for Social care to stand together and push for a better deal doctors went on strike
Something has got to give .
A practice educator told me in conversation that social work courses are going to close due to a lack of people wanting to train.#
A clear sign of where our profession is , and perhaps heading .
I look around these day after a decade in the job and all I see is nodding heads , more managers , and bubble speak which I think some people feel is a match for witch craft or something .
I dont want to lie down though , nor will I but bloody hell what a sucker punch the increase in NICs is and like witchcraft the rise in the average hourly rate was supposed to make all ok . One hand to the other what a load of BS . Still not lying down though and more than ready to strike !
Very sorry to hear Pam has lost what sounds like a rewarding job .