Unfunded costs such as staffing have led to fewer people receiving publicly funded social care, a report from the King’s Fund has found.
The Social Care 360 report, which looked at social care data between 2015/16 and 2023/24, suggested that successive governments have ‘failed to take responsibility’ for the costs of introducing statutory minimum wage in the social care sector which created an ‘annual chain reaction’.
It suggested the higher costs for providers had resulted in increased fees paid to them by local authorities and ultimately fewer people accessing publicly funded care as local authorities ‘try to balance their books’.
The report said: ‘This trend was evident from 2015/16 to 2021/22 and has only recently been reversed: we argue that it must not be allowed to return.’
Between 2015/16 and 2023/24, care worker pay increased by 17% in real terms, due to minimum wage, according to the report. Over the same period, fees local authorities paid to independent care providers increased by 33% in real terms for older people’s care homes, 13% for working-age adult care homes, and 18% for homecare.
The number of people supported across the period fell from 873,000 in 2015/16 to 859,000 in 2023/24. The majority of this came from a reduction in support for older people, with a 4.8% drop from 587,000 supported to 559,000.
The report added that the chain was ‘fully broken’ in 2023/24, when an increase in local authority budgets meant they were able to pay higher fees and increase the number of people supported.
It said: ‘The link between the minimum wage, the increasing cost to providers, the higher fees paid by local authorities and the lower number of people being supported is too strong to be ignored.
‘The risk is, however, that it will be. The government intends a number of measures that will increase the costs of care providers, including a significant increase in employers’ national insurance contributions this year.
‘Some of these measures will directly improve the working lives and conditions of care workers – for example, the proposed increase in the pay of care workers beyond the statutory minimum through a ‘fair pay agreement’. It will have the added benefit of increasing the competitiveness of social care pay compared to other sectors, and so should improve recruitment and retention.
‘But the combined effect for providers is a significant increase in costs and a fear that many of them will be forced out of the market. It is certainly possible that some will be.’
It warned that unless the government fully reimburses the cost of these measures, local government could have to ‘ration services’ and return to the trend of 2015/16 to 2021/22.
‘That would be a tragedy, and an avoidable one. It should be a key concern for the first phase of the government’s new commission on adult social care,’ it said.
In response to the analysis, Rory Deighton, acute director at the NHS Confederation, said: ‘Social care provides vital support to hundreds of thousands of people across the country, so it is worrying to see this analysis suggesting that rising pay costs is leading to fewer people receiving support.
‘The NHS also relies on the social care sector to help support people in the community and when they leave hospital. The health service has had a very difficult winter, with unacceptable levels of corridor care and long ambulance handover delays.
‘Our members report that the financial and staffing problems in social care are a key factor in delays discharging medically well patients from hospitals, with around 13,000 beds taken up by patients who no longer need to be there.
He added that urgent and emergency care performance would not be improved until the challenges with social care were addressed.
It comes as the House of Lords voted to exempt primary care from having to pay increased National Insurance contributions from April.
On 4 March, the bill will have its third reading in the House of Lords, which will be the final opportunity for peers to amend the bill.
Following this stage, the bill will go back to the House of Commons for consideration of amendments. MPs can decide to agree or disagree with the amendment, or propose changes, before the bill can receive Royal Assent.
Earlier this year, MPs were told that the social care commission should report to the Prime Minister within a year, rather than the three years it’s been given.
The independent commission, which was launched at the start of the year by the government, will be chaired by Baroness Louise Casey of Blackstock, and will look at how to rebuild the adult social care system.
