The government’s expectation of more for less won’t fix social care

The Homecare Association is worried by media reports that the government plans to add NHS health checks to careworkers' duties. Currently, there is inadequate funding for wages and training, ineffective regulation, and a lack of meaningful collaboration between the NHS and social care on the ground. Providers cannot therefore implement these proposals safely or sustainably at scale. While well-intentioned, ministers are expecting more for less, which risks harm to people and providers.

For years, the Homecare Association has pushed for better links between health and social care. Most people receiving care have substantial healthcare needs. It makes sense for care workers to develop their skills to offer more support for health and social needs. But the government's proposals continue to ignore the sector's challenges.

Our research shows many councils and NHS bodies are already commissioning homecare services unethically at unsustainable rates – some as low as £17 per hour. This cannot cover even basic staff costs, which average £20 per hour at the current minimum wage of £11.44 with statutory employment on-costs. From April 2025, when the minimum wage rises to £12.21, average direct staff costs will increase to £22.71 per hour. This is before we include other running costs, including training.

The proposed expansion of responsibilities will require significant additional training and digital infrastructure. Yet the government has not explained how it will fund this, when current fee rates don't even cover basic operating costs.

The digital transformation of care records, while essential, faces significant practical challenges. There is now 72% uptake of digital care records in regulated homecare services. The Autumn Budget has left providers with a 10% increase in costs, which are unfunded. In a recent survey of over 1200 providers, 75% said they will reduce or stop investment in digital transformation. There are also 120,000 unregulated sole traders (20% of the homecare workforce) providing care in people’s own homes, many of whom lack digital tools and are not required to undergo training. The government's plans do not address these fundamental issues.

Dr Jane Townson OBE, CEO of the Homecare Association, said:

"This is yet another example of the Labour government pretending to fix social care whilst making the situation worse. Ministers talk about fair pay agreements while refusing to fund even statutory increases in employment costs. Its Autumn Budget 2024 is putting many care services at risk.

"How can providers invest in training and digital systems when they're being paid less than the cost of minimum wage? How can we integrate with NHS neighbourhood teams when most NHS bodies don’t even talk to social care providers? The government cannot fix social care by piling on more responsibilities while stripping away funding.

"We've calculated providers need a minimum price of £32.14 per hour for homecare in 2025-26 to ensure sustainability and compliance with regulations. Yet our latest research shows only 1% of contracts with local authorities and NHS bodies meet even current minimum price requirements. Without adequate funding, these new proposals risk accelerating the collapse of care provision."

The Homecare Association calls on the government to:

1. Provide emergency funding of at least £1.8 billion to address the cost pressures in homecare
2. Implement a National Contract for Care services that sets sustainable minimum prices for homecare
3. Ensure integration plans include proper representation of homecare providers in NHS neighbourhood teams
4. Fund the full cost implications of any new responsibilities or requirements

[ENDS]

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Notes to Editor

(1) The Homecare Association is the UK's membership body for homecare providers, with over 2,200 members nationally. Its mission is to ensure homecare receives the investment it deserves, so all of us can live well at home and flourish in 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).

• 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
• Care homes for younger adults have seen EBITDA margins halve from 26% to 13%
• Older people's care homes serving mainly state-funded residents have seen margins fall by 50%

(10) 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.