Higher care provider fees and stretched council budgets are creating a “doom loop” in adult social care, where fewer people receive the help they need despite rising demand, a report has warned.
The latest analysis from The King’s Fund suggests that there is a “real risk that even more people who need care will have to go without” as care providers increase fees to cover wage rises and national insurance costs, while local authorities struggle to meet financial pressures by reducing the number of people they support.
Fewer adults receiving care despite increased demand
The report highlights a concerning trend over the past decade: despite a rise in requests for social care assistance, fewer adults are receiving long-term support from local councils in England.
Between 2015/16 and 2023/24, the number of people supported with long-term care by local authorities dropped from 873,000 to 859,000. At the same time, the number of new requests for help increased from 1.8 million to 2.1 million.
Rising costs for care services
Councils have faced increasing costs when paying independent providers for care services. Over the past decade:
- Fees for older people’s care homes have risen by a third in real terms.
- Fees for working-age adult care homes have increased by 13%.
- Home care costs have grown by 18%.
The financial strain has been exacerbated by increases in national insurance contributions (NICs) and wages, placing additional pressure on an already fragile system.
Impact of budget decisions on the sector
In the October Budget, Chancellor Rachel Reeves announced an increase in the employers’ NICs rate by 1.2 percentage points, bringing it to 15%. Additionally, the threshold at which employers start paying NICs was lowered from £9,100 to £5,000, expected to raise £26 billion annually.
At the same time, the national living wage will rise by 6.7% from April 2024, increasing from £11.44 to £12.21 an hour for workers aged 21 and over.
Care providers, many of whom demonstrated outside Parliament last week, have urged the government to exempt them from the NICs rise, warning that without relief, they face an existential crisis.
The ‘doom loop’ effect
The King’s Fund report warns that these financial pressures have created a vicious cycle, or “doom loop,” in which:
- Providers demand higher fees from local authorities to cover rising costs.
- Councils, unable to afford these increases, reduce the number of people they support.
- More individuals who need care are left without assistance.
Simon Bottery, a senior fellow at The King’s Fund and author of the report, described the situation as “worsening again” due to rising staffing costs from increased NICs.
He said:
“The minimum wage rise is richly deserved by care workers but hasn’t been fully funded by the government. As a result, we have seen a ‘doom loop’ in which social care providers have sought large fee increases from local authorities, which in turn have had to cut the number of people they support to make ends meet.”
Mr Bottery also warned that unless the government provides additional funding to councils, more people will be forced to go without care, while providers struggle to stay in business.
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The future of adult social care
In an effort to address the crisis, the government has commissioned an independent review into adult social care, led by Baroness Louise Casey. The commission will begin work in April, with an initial report expected by mid-2026. However, long-term recommendations may not be published until 2028.
Many in the sector, including Mr Bottery, have expressed frustration with the slow pace of change. He described the commission’s timeline as “disappointing” but acknowledged that it presents “the best available opportunity to bring about the vital reform that is needed.”
The government has defended its response to the crisis, stating that it has taken immediate action, including:
- A £3.7 billion funding boost for social care.
- 15,000 new home installations to support disabled individuals in living safely and independently.
- A £2,300 increase to carers’ allowance.
It also reiterated its commitment to establishing a National Care Service, which aims to provide high-quality care for all and ensure the sector is “fit for the future.”
However, care providers and campaigners remain sceptical, warning that without urgent intervention, adult social care will continue on a downward trajectory, leaving thousands without the support they need.
