Care England, representing the voices of adult social care providers across the country, issues this urgent statement to Government, calling for immediate and sustained action to address the funding crisis facing adult social care. The current financial provision is profoundly inadequate, and without meaningful intervention, the sector is at risk of severe destabilisation. The recent Budget fails to reflect the true costs facing providers and the broader implications for local communities and the health system as a whole.
The role of adult social care in our society cannot be overstated. It is a fundamental pillar that provides dignity, safety, and independence to millions, supports families, underpins local economies, and alleviates pressure on the NHS by enabling timely hospital discharges and reducing avoidable admissions. Yet, it is a sector that has been left on the margins of government policy, despite clear evidence of its essential contributions to community and economic wellbeing.
The Chancellor has stated that the Government “…are confident in the settlements we’ve made that those costs can be absorbed”, but this confidence is misplaced. The reality is that these settlements fall far short, leaving adult social care providers unable to absorb the rising costs without risking essential services.
The Growing Financial Crisis in Adult Social Care
The adult social care sector was already facing an unsustainable level of pressure before recent policy changes added further financial strain. Years of underfunding, rising demand, and workforce challenges had left providers in a precarious position, struggling to deliver essential services within increasingly tight budgets. Now, the recent uplift in the National Living Wage (NLW), the increase in Employer National Insurance (ENI) contributions and the reduction in the Secondary Threshold have together driven the adult social care sector to the brink, imposing an additional £3.7 billion in costs. This equates to a 10.6% rise in pay expenses from April 2025, a burden that many providers cannot realistically absorb.
The Government’s £600 million grant – split between adult and children’s social care – along with council tax precepts and other local contributions, offers little relief, and falls drastically short of the actual funding needed. Even with maximum local revenue support, local authorities are still facing an estimated £1.3 billion funding gap for publicly funded adult social care.
This shortfall is not an abstract figure; it is a stark reflection of the rapidly intensifying crisis within the sector. Providers, already operating on the thinnest of margins, now face impossible choices. Many are being forced to hand back contracts to local authorities or close their doors entirely, leading to a reduction in available care, compromised service quality, and the erosion of essential support for vulnerable individuals. Local councils, equally impacted by budget constraints, are left with few options: to ration social care further or make cuts to other critical services, directly impacting the broader community.
Without immediate intervention, these funding gaps and closures will have far-reaching consequences, straining local economies, increasing pressures on families, and placing additional burdens on the NHS. The social care sector is at a tipping point, and without urgent, comprehensive funding reform, the essential care and support that millions of individuals rely on will be at severe risk.
The Current Shortfall and Cost of Inaction
Even before the recent Budget changes, there was already a significant disconnect between what local authorities were paying and the true cost of care. On average, local authorities are still paying less than the fair cost of care for older person residential services, with a shortfall of £4 billion in 2024/25. This funding gap has only widened over recent years, as local authorities struggle to keep pace with inflationary pressures and increased care demands.
This underfunding means that providers, who are often heavily reliant on public funding, are forced to operate with resources well below what is required to deliver safe, quality care. For some time now, adult social care has been subsidised by providers drawing on reserves, or cutting back on essential investments. But this is not a sustainable model, and the sector can no longer shoulder the burden of systemic underfunding.
If this funding shortfall is not addressed, the consequences for adult social care will be profound. Providers are already facing difficult decisions, and we will see a worrying trend of service closures, contract handbacks, and reductions in care quality and accessibility. Vulnerable individuals – older people, those with disabilities, and individuals with complex needs – risk losing access to the care that allows them to live with dignity and autonomy. Family members who depend on social care to support their loved ones will also face greater challenges as services disappear or become prohibitively expensive, and will have no other choice but to provide unpaid care themselves.
The impact of these failures will reverberate far beyond the social care sector itself. The NHS, which depends on a functioning social care system to facilitate timely hospital discharges and avoid unnecessary admissions, will face increased pressures, longer waiting times, and higher costs. Currently, over 45% of hospital discharge delays are linked to social care, highlighting how deeply intertwined the two systems are. Without sustainable funding for adult social care, the NHS will be left shouldering the costs of this policy failure, which will undermine the Government’s healthcare objectives and increase the overall burden on public services.
The Economic Argument for Investment in Social Care
The social care sector is one of the UK’s greatest yet under recognised economic powerhouses, contributing £68.1 billion annually to the nation’s economy. This vital sector not only sustains millions of jobs but also drives economic growth across communities, generating substantial local employment and creating opportunities for small businesses, suppliers, and service providers. Every £1 invested in adult social care generates an impressive return of £1.75 – a multiplier effect that reinforces local economies, reduces inequalities, and strengthens the very fabric of our society. Yet, this powerhouse remains underutilised and undervalued, often relegated to the margins of economic strategy. Failing to capitalise on social care’s vast potential is a missed opportunity to drive inclusive growth, build resilient communities, and secure long-term economic stability for regions across the England.
Moreover, the benefits of a well-supported social care system extend beyond economic gains to encompass essential healthcare outcomes. Social care is a critical partner to the NHS, helping alleviate some of its most pressing challenges by providing timely and appropriate care in local communities. When individuals receive effective support in their homes or communities, the need for costly hospital interventions is reduced, freeing up NHS resources for acute and emergency care. A robust social care sector also facilitates faster hospital discharges, improves patient outcomes, and reduces readmission rates, which is essential for the sustainability of the healthcare system. For a government that seeks to support both local communities and the NHS, overlooking the strategic importance of social care is not only a missed economic opportunity but also a risk to public health infrastructure. Investing in social care is a direct investment in the health and wellbeing of our population, making it essential to acknowledge, support, and prioritise this powerful sector.
A Call for Immediate Action and Sustainable Reform
Care England and its members call upon the Government to urgently rethink its approach to adult social care funding. We are calling for a comprehensive, sustainable solution that recognises the essential role of adult social care in our society and addresses the true costs of delivering high-quality care.
Our sector stands ready to work with the Government to develop these solutions, but the time for delay has passed. We urge policymakers to listen to the voices of social care providers, local authorities, and the individuals and families who rely on these services. Immediate, meaningful reform is needed to prevent the collapse of a sector that underpins the health, economic stability, and resilience of our communities.
The time to act is now. Without decisive government intervention, the future of adult social care – and the wellbeing of millions who depend on it – is in jeopardy. We invite the Government to join us in finding a path forward that will secure the future of adult social care and strengthen the social and economic foundations of our society.
For further information, please contact Care England
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