Homecare Association says government choices risk collapse of vital services
The Homecare Association has today issued a stark warning that the Chancellor's Spring Budget fails to address an escalating crisis in homecare – one fuelled by government choices and inaction. While the government claims "the world has changed," nothing has changed for social care. The same chronic underfunding persists, compounded now by additional cost pressures from Autumn Budget decisions.
Dr Jane Townson OBE, Chief Executive of the Homecare Association, 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."
ENDS
Contacts
Media team
Email: [email protected]
Mobile: 07435 910 654
Notes to editors
1. The Homecare Association is the UK's membership body for homecare providers, with over 2,200 members nationally. Our mission is to ensure that homecare receives the investment it deserves, so all of us can live well at home and flourish within our communities. The Homecare Association acts as a trusted voice, taking a lead in shaping homecare, in collaboration with partners across the care sector. It also provides hands-on support and practical tools for its members. The Homecare Association’s members agree to abide by the Association’s Code of Practice.
2. The care sector comprises 18,500 PAYE employers, 10,850 of those are non-residential and 7,650 are residential (Skills for Care 2024). Total market value is £35.3 billion (LaingBuisson 2024), contributing £68.1 billion to the economy.
3. Local authorities and the NHS buy 70-80% of all care services (LaingBuisson 2024).
- 96% of supported living.
- 89% of care homes for younger adults.
- 79% of homecare.
- 57% of older people's care homes.
4. NHS funding represents 25% (£1,692 million) of the total funding for homecare (£6,656 million). The rest comes from councils (50%; £3,348 million); direct payments (3%; £212 million); private-pay (21%; £1,375 million); and other (1%; £30 million) (LaingBuisson 2024).
5. The fee rates local authorities and the NHS pay now are too low to cover costs (Homecare Association). Only 1% meet our Minimum Price for Homecare of £28.53 per hour in 2024-25. This will rise to £32.14 per hour in 2025-2026, as detailed in our new Minimum Price for Homecare report.
6. Employment costs, representing 70-80% of providers' total costs, will surge by at least 10% in 2025-26. This is driven by increases in employers' national insurance contributions and minimum wage requirements. We provide detailed analysis in our Minimum Price for Homecare 2025-26 report.
7. Providers cannot pass on these increased costs as local authorities and NHS bodies, their primary customers, fix prices. Many councils cannot balance their books and directors of Adult Social Services must cut budgets by £1.4 billion.
8. Key findings from a recent Care Provider Alliance survey show that without immediate government intervention:
- 73% will have to refuse new care packages from local authorities or the NHS.
- 57% will hand back existing contracts to local authorities or the NHS.
- 77% will have to draw on reserves.
- 64% will have to make staff redundant.
- 92% of providers who also serve people who pay for their own care will be forced to increase rates for self-funders. Many self-funders will be unable to bear extra costs and may reduce care or rely more on family carers.
- 22% are planning to close their businesses entirely.
9. Profitability in the state-funded sector has plummeted over the past decade (LaingBuisson 2024).
10. Homecare average EBITDA margins have fallen from 10.8% to a low of 5.2% in 2019, with some recovery to 7.6% in 2024.
11. Care homes for younger adults have seen EBITDA margins halve from 26% to 13%
12. Older people's care homes serving mainly state-funded residents have seen margins fall by 50%
13. Despite some perceptions, private equity involvement in the care sector is limited. Just 12.2% of older people's care homes; 10.1% of younger adult care homes; and 12.2% of homecare/supported living services are private equity backed.
