Chancellor Rachel Reeves’ Spring Statement on March 26, 2025, has intensified concerns within the UK’s social care sector, spotlighting the enduring issue of underfunding and the looming financial strains poised to affect millions who rely on these essential services.
Chronic underfunding, combined with the government’s recent decision to increase Employer National Insurance Contributions (ENICs), is pushing, sector leaders say, the sector closer to breaking point.
Despite efforts from the House of Lords to shield care providers from these additional costs, the government has moved forward with measures that could have devastating consequences for millions relying on care services.
The Nuffield Trust has warned that social care has been “once again hung out to dry,” as the government’s decision to raise employer NICs will significantly increase the financial burden on care providers.
Nuffield Trust Senior Policy Analyst Sally Gainsbury said:
“Today’s (March 26) announcements have added to the already substantial pressures being felt in the health service. They mean that the day-to-day health budget for next year will grow by less than 2% in real terms, after adjusting for the impact of national insurance increases in the NHS. This compares to a long-term average of nearer 3%.”
“The government has highlighted opportunities for savings made to central administration costs to be reinvested into the front line, such as through dismantling NHS England. It’s absolutely right to drive down duplication and waste when the health service is under such pressure. But these savings are unlikely to deliver anything like the boost to funding needed to keep up with population demand.”
“Over the last decade and a half, successive governments have repeated the same mistake of underestimating the level of funding growth required to keep up with growing patient needs and expectations, resulting in chaotic last minute top ups to the budget. This has already happened for the budget for the current financial year, which had to be supplemented with an extra £800m for the NHS just four months after the Chancellor’s autumn statement.”
“Adult social care has once again been hung out to dry. Today’s statement confirms the absence of funding to cover extra costs, which we estimate will amount to £2.8bn from Employer National Insurance Contributions and minimum wage increases for care providers. This will likely lead to many providers going bust or reducing services, meaning people will suffer from less choice or poorer quality care.”
“The government has promised long-term reform of adult social care with the upcoming Casey Commission. The newly announced Transformation Fund offers billions of extra funding for reforming public services, but it’s unclear whether any of this will be used for desperately needed changes to adult social care. Today’s worrying financial outlook risks jeopardising the sector before Baroness Casey’s feet are even under the table.”
David Ashton-Jones, Chief Executive at Homes Together said:
“The government’s Spring Statement may focus on the economy, but it overlooks the chronic underfunding of social care, which puts millions at risk. Care providers need sustainable funding to continue delivering high-quality services. Ongoing financial uncertainty from local authorities, rising National Insurance costs, and welfare cuts add further strain on the sector.”
“With 3.2 million families set to be affected by benefit reductions, many vulnerable individuals will struggle to access care, pushing even more pressure onto an already stretched system. Without urgent action, the funding shortfall will leave care providers unable to meet rising demand, especially in areas like Harrogate, where specialist care is crucial. We need sustainable investment to ensure people with complex needs receive the support they require without adding further pressure to local health and social care services.”
“Private care providers are already stepping in to fill the gaps left by underfunded public services, but we cannot do this without government support. Without realistic funding, long-term investment, and protection for those reliant on benefits, we risk a capacity crisis that could threaten the entire sector.”
Liz Jones, Policy Director at NCF commented:
“Since taking office following the General Election result last summer, the government has reiterated its messages around cost-savings, balancing budgets and making difficult decisions. We have since seen the “catastrophic impacts” of the increases to Employer National Insurance costs passed by the government this week despite the best efforts of the House of Lords which Nuffield Trust describe as social care having “once again been hung out to dry”. All this combined means that we arrive at the Spring Statement with trepidation.”
“It is clear that the statement today, on top of the welfare reform announcements last week will create far reaching impacts on the millions of people who rely on care and support services every day to live good lives, many of whom are supported by our not-for-profit members. There is nothing in this statement for the many organisations across the adult care and support sector working hard every day to provide care and support services to help people live fulfilled lives.”
Despite repeated calls from care sector leaders for sustainable funding social care continues to be treated as an afterthought in government spending plans.
The failure to exempt social care providers from the ENICs increase once again highlights the government’s lack of commitment to securing the future of care services. Dr. Jane Townson OBE, CEO of the Homecare Association, has expressed deep concern, warning that without urgent support, many homecare providers will struggle to stay afloat.
Laura Davies, Chief Operating Officer at The Good Care Group, said:
“Today’s spring statement was yet another missed opportunity from the government to invest in social care. Demand for care is currently at a record high, and pressure on the healthcare system is reaching breaking point resulting from a lack of adequate investment, and decades of cuts.
“The Lords’ attempted amendments to the National Insurance Contributions Bill was a clear signal that the sector is in desperate need of relief. Without urgent long-term funding, the recent hikes will only add to these pressures.
“While Secretary of State for Health & Social Care, Wes Streeting just this week announced the NHS plan will see funds allocated to social care, there must be more clarity on the timing and roll out of this proposed investment.
“With care providers facing increased costs, unregulated care could soar due to these care providers being less impacted by training or compliance costs. This could increase the risk of inadequate care, as there is also no requirement for background checks on staff at unregulated care agencies.
“It is not only older people who are affected. The government’s confirmation of stricter qualification criteria for PIP payments, and the freezing of universal credit incapacity benefits, could have a profound impact on people’s standard of living and ability to fund their care. Also, while the government confirmed earlier this year it would be providing a boost to the Disabled Facilities Grant for home adaptations, the upper limit for individual payments hasn’t been increased since 2008. It’s vital the government prioritises long term solutions for the sustainability of care and communities, rather than continuing to take drastic measures to make short term savings and kicking long-term sustainability of the care system into the long grass.”
Dr Jane Townson said:
“The government talks about change, yet we see the same neglect of social care – only now, with even higher costs. By refusing to exempt care providers from the increase in Employer National Insurance Contributions (ENICs) while failing to uplift local authority funding to meet increased costs, the government is driving homecare services towards collapse.”
“We are being forced to face a grim reality – cut care, slash quality, restrict pay, or close the doors of services. The consequences of this will be felt by thousands of older and disabled people will, by families forced to give up work to care, and by an NHS already under extreme pressure.”
The Homecare Association highlights decisions in the Autumn Budget 2024 have added about 10% to provider costs. Yet today’s Spring Budget makes no attempt to mitigate this or to close the £1.8 billion homecare funding gap that exists.
“We keep hearing about ‘home first’ and ‘fair pay for care workers’, but this Budget blows a hole through both,” Dr Townson continued. “You can’t have fair pay without a fair price for care. You can’t keep people at home without sustainable services to support them.”
The Association’s newly published Minimum Price for Homecare 2025-26 sets the hourly cost of delivering regulated homecare in England at £32.14 – the minimum needed to meet legal obligations and pay careworkers fairly. Shockingly, only 1% of local authorities currently pay rates that meet even the 2024-25 minimum.
“We support Labour’s aspiration to invest more in social care for better outcomes and better value, but so far, that promise is rhetoric, not reality.”
“Without urgent action from this government, the UK risks the collapse of homecare services. The time for lip service is over. We need investment – now.”
