The impact of Budget 2024 on Care Providers?
The 2024 UK Budget introduced several changes with significant implications for social care providers and the people who rely on these essential services.
Below, the Homecare Association and Care England talk about the impact that this years budgets will have on care providers.
Care England said:
“The government’s neglect to fund adult social care in the Budget is concerning,”.
With a 6.7% increase in the National Living Wage (NLW) alongside a 1.2% rise in Employer National Insurance contributions and a cut to the Secondary Threshold to £5,000, the sector faces an additional circa £2.4 billion funding hole to plug. This is no small burden for a workforce of 1.59 million full time equivalents, and a sector which relies on 50% of those cared for to be funding via local authorities who have been provided only £600 million in new grant funding for social care, shared across both adult and children’s services.
The announced new £600 million grant fails to come close to bridging the gap, especially with a shortfall of a £4 billion deficit identified in the Market Sustainability and Improvement Fund (MSIF) analyses’ conducted by Care England and the Homecare Association in October. The MSIF and the recent NLW and Employer’s National Insurance (ENI) announcements leaves adult social care underfunded by approximately £6.4 billion. Of this amount, over £5 billion would need to be covered by local authorities to maintain essential services.
The government’s neglect to fund adult social care in the autumn statement is concerning. Without the support needed, the social care sector is in unprecedented danger; and as a result of this decision, we are likely to see an increase in the number of contracts handed back to local authorities by providers, closure of services that are no longer viable, and the inability for some care providers to sustain or move towards paying the real living wage.
The new government has failed to prioritise adult social care yet again, despite the clear evidence that a £1 investment in social care yields a 175% return to local communities, benefitting both the economy and the lives of vulnerable citizens.
In stark contrast to the meagre provisions for adult social care, this Budget includes:
- £22.6 billion for the NHS, with an additional £3.1 billion for capital projects
- £11.2 billion for education
- £2.4 billion for transportation and infrastructure
- £2.3 billion for school recruitment
- £1.8 billion for childcare
- £1.4 billion to rebuild schools
It is undeniable that adult social care remains low on the agenda, and older and disabled people are clearly not a priority for this government who is leaving them yet again in the shadows, ignoring a sector in crisis. For a government that professes to value local communities and local people, this continued neglect of adult social care is nothing short of shameful.
Professor Martin Green, OBE, chief executive of Care England, commented:
“Today’s Budget is a glaring missed opportunity by a government full of promises to make a real difference to adult social care and establish a sustainable funding framework that meets the gravity of our current crisis. The government’s £600 million commitment to be shared between adult social care and children’s services is, unfortunately, a drop in the ocean compared to the staggering £2.4 billion in rising costs associated with wage increases and employer national insurance contributions. When we see £22.6 billion directed towards the NHS, it’s disheartening that social care once again receives only a fraction of the support it needs, despite its critical role in easing NHS pressures
Adult social care is not simply a supplementary service but a core component of our healthcare system enabling timely hospital discharges and ensuring thousands receive safe, dignified care at home or in their communities. Social care stands as a solution to many challenges facing the NHS. Yet, this Budget and this government fail to recognise its vital role. Without immediate, adequate funding, the cost of inaction will be devastating; delayed hospital discharges, overstretched providers, and vulnerable people left without the care they desperately need.
The reality is that without serious investment in adult social care, the government is choosing short-term savings over long-term stability. We needed a bold step forward, a signal that adult social care matters to the fabric of our society. 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. If the government truly wants to create a more resilient health and care system, it must support social care with the same commitment it shows the NHS.”
Care England calls for an urgent revision of this Budget, a clear re-commitment to the MSIF fund, and a sustained investment strategy that addresses the immediate and long-term needs of adult social care.
The Homecare association has also done a fantastic job of summarising how the changes in this Autumns budget effects care providers and their customers.
Here’s what the Homecare Association had to say:
Whilst it is positive in principle to see a rise in the National Minimum Wage (NMW) to £12.21 per hour, an increase of £600m in the social care grant is nowhere near enough.
Many small providers cannot afford the extra costs of higher pay and an increase in employer’s national insurance.
The state purchases 70-80% of social care services. Staffing comprises 70-80% of costs of care delivery. Unlike other businesses, care providers cannot increase prices because public bodies dictate these.
Our research shows only 1% of councils and NHS bodies are buying homecare at fee rates which enable compliance with this year’s NMW of £11.44 per hour.
Some are paying less than direct staff costs at the NMW, an average of £19.90 per hour.
In August 2024, we calculated a funding deficit for homecare of £1.08 billion to cover the NMW of £11.44. Many care workers cannot be receiving the NMW now. Announcing another unfunded hike in the NMW will not change this.
Many councils are so cash-strapped they are driving down fee rates and encouraging unregulated care. This favours unethical or inexperienced providers willing to bid for work at £18 per hour. Ethical, good-quality providers are being squeezed out of the market.
Councils, NHS bodies and multiple regulators appear to be turning a blind eye, which is a national scandal.
The Homecare Association calls on the Chancellor to:
1. Provide a multi-year funding settlement for social care to meet future demand and cover the full cost of care (estimated £18.4 billion needed by 2032/33).
2. Implement a National Contract for Care services that establishes a minimum price for homecare. This will ensure public sector commissioners pay the full cost for good quality care.
Why not have your say by contacting your local MP.