LaingBuisson adult social care market report

The UK risks widespread failure of care provision. This could leave people without care; overwhelm family carers; and cripple NHS services.

A new care market report by LaingBuisson, leading industry analysts, reveals a sector in a precarious financial state. Rising costs from Autumn Budget measures are threatening the viability of many providers. Providers serving the state-funded market are most at risk.

Contrary to some perceptions, private equity controls just over 10% of social care capacity overall. Small, local providers comprise 80-85% of the sector. They operate on thin margins, lack financial resilience and are very vulnerable. Data show that larger state-funded providers, too, may struggle to remain afloat.

The analysis reveals several critical factors threatening sector sustainability:

• Local authorities and the NHS buy 70-80% of all care services. The fee rates they pay now are too low to cover costs.
• 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.
• 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.

Our Chief Executive, Dr Jane Townson OBE, said:

“We risk a significant reduction in care and support services. This could leave thousands of older and disabled people without essential support; force family members to quit their jobs to provide care; and increase NHS waiting lists. Local authorities and providers agree we are at a tipping point and need immediate government intervention.”

We call on the government to:

1. Invest at least £2.8 billion in the care sector to mitigate these risks. Evidence shows that every £1 invested saves £3 in longer-term costs across the health and care system.
2. Exempt care providers from changes to employer's national insurance contributions.
3. Ensure a multi-year funding settlement for social care to meet future demand and cover the full cost of care (estimated £18.4 billion needed by 2032/33)
4. Implement a National Contract for Care service that sets a minimum price for care services. This will ensure public sector commissioners pay the full cost of quality care.

Find our press release here.