Government must avert a return to social care ‘doom loop’ of increasing costs and falling provision

The increasing cost of paying staff has ultimately led to a fall in the number of people receiving publicly funded long-term care, says a new report from The King’s Fund.  

Social Care 360 analyses nearly a decade’s worth of data and reveals a ‘doom loop’ of rising wages, increasing fees, stretched budgets, and less care available to those who need it. 

Local authorities, which fund most social care in England, have been forced to pay much higher fees for care because the introduction of the National Living Wage in 2016 has pushed up the cost of providing it. While the pay increase for care workers has been welcome and necessary, to balance their books local authorities had to reduce the number of people they support, despite increasing demand for social care services.  

This trend has changed in the past two years thanks to increased funding, but The King’s Fund warns that the cycle may be about to repeat itself because local authorities are now seeing increasing financial problems and face a ‘double whammy’ of staffing costs, with minimum wage increases combined with the rise in National Insurance contributions that the government announced in the Autumn Budget.  

There are also fears from care providers that a planned ‘fair pay agreement’ in social care, while welcome, will further add to costs unless it is fully funded.  

The new analysis shows that although councils spent more on care, the number of people they could afford to support with long-term care actually fell between 2015/16 and 2023/24. Social Care 360 finds that: 

• between 2015/16 and 2023/24, care worker pay increased by 17% in real terms, due to the National Minimum Wage.  

• over the same period, 2015/16 to 2023/24, the fees local authorities had to pay to independent care providers increased by 33% in real terms for older people’s care homes, by 13% for working-age adults care homes, and by 18% for homecare.  

• however, across those same eight years, the number of people supported with long-term care by local authorities fell, from 873,000 in 2015/16 to 859,000 in 2023/24. The fall was driven by a 4.8% reduction in support for older people, from 587,000 to 559,000.  

Figures in the report show that the decrease in people receiving long-term support from their local authority comes despite an increase in people requesting help, up from 1.8 million new requests in 2015/16 to 2.1 million in 2023/24.  

Simon Bottery, Senior Fellow at The King’s Fund and lead report author, said: 

‘The increase in the minimum wage has been richly deserved by care workers but hasn’t been fully funded by 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. 

‘Now, just as that situation was starting to improve, it runs the risk of worsening again because of the big increase in staffing costs stemming from the rise in employers’ National Insurance contributions, which has hit social care particularly hard. Unless the government makes sure local authorities have enough money, there is a real risk that even more people who need care will have to go without.’ 

Together the findings paint a picture of a social care system under immense strain, with local authorities struggling to meet demand, providers worrying about staying in business, and many people in need of care forced to either pay for their own care, rely on family and friends or go without. Yet the government has cancelled reforms that were due to be introduced in 2025. Instead, it has appointed a commission to be led by Baroness Louise Casey, which will not fully report until 2028.  

Bottery added: ‘The timescale of the commission is disappointing, but it presents the best available opportunity to bring about the vital reform that is needed. The issues themselves are not hard to identify; many of them are set out in our new analysis. The real challenge is to agree on solutions and for the government to have the political will to implement them.’ 

Other findings from Social Care 360, which looks at requests for support, usage with age and staff vacancies, include: 

• requests for support continued to rise in 2023/24, reaching 2.1 million. The highest increase was among working-age adults, which rose 8% to 658,000. Requests from older people rose 3% to 1.43 million  

• new data shows how usage of social care increases with age: around 1.5% of the population is receiving publicly funded social care but this varies, from 0.7% of 18-24 years old to 11.7% of people over 85 

• care worker vacancies fell to 8.3% in 2023/24, driven by a large increase in the number of overseas staff. Between March 2022 and March 2024, around 185,000 people started direct care roles after arriving from abroad.   

Notes to editors

For further information please contact the Press and Public Affairs team on 020 7307 2585. 

The King's Fund is an independent charity working to improve health and care in England. We help to shape policy and practice through research and analysis; develop individuals, teams and organisations; promote understanding of the health and social care system; and bring people together to learn, share knowledge and debate. Our vision is that the best possible health and care is available to all.