Care Sector in Crisis: Councils and Providers align in urging government intervention

LONDON Nov 30: The care sector is facing an existential threat due to a combination of factors that are putting immense pressure on care providers and local councils. Local councils are voicing similar concerns as care providers, as they are often responsible for commissioning and funding care services in their areas. They are calling on the government to address these issues and provide the necessary support and resources to ensure the sustainability of the care sector.

Without significant action, there is a real risk that the care sector could collapse, leaving vulnerable individuals without the support they need and placing additional pressure on other parts of the health and social care system. Both Councils and Providers are urging the government to address their concerns and provide the necessary support to ensure the sector’s survival.

The government has published the local government finance policy statement for 2025/26, which sets out how it intends to distribute resources to councils next year.

Key points for providers are:

Local authorities will received a real-terms increase in Core Spending Power of approximately 3.2%
Social Care Grant will increase by £680 million to a total of £5.7 billion
Market Sustainability and Improvement Fund (MSIF) will provide £1.05 billion to support provider pressures and fee rates
Better Care Fund (BCF) will receive £2.6 billion (including discharge funding)

Jane Townson, the CEO of the Homecare Association, has expressed a range of opinions on the government’s finance policy statement. This is what she wrote on her social media: “Neither the MSIF money nor the BCF money are new, but it is a relief this funding is continuing. There were rumours this funding might be stopped or reduced.

“The only definitive new money is the £680m for social care (an increase of £80m on the Chancellor’s statement) and the adult social care precept (which some councils may decide not go for). There is money from the Recovery Grant, but this is going to be targeted, and some councils will not get any.

“In practice, this doesn’t change the situation that the extra funding is well short of the cost of the National Living Wage, NI changes and the impact of demography. The care sector is facing an existential threat. Councils are saying the same things to government as providers.

“Councils are really worried about the potential prospect of 57% providers handing back work. If they can’t find other providers to do it, they will have to take it back in-house. This would sink councils financially.

“We will be writing to all Directors of Adult Social Services to urge them to engage with providers asap. Councils will have to wait for the details of their allocations from the Settlement and then agree budgets for 2025-2026. As we all know, this takes several months.

“Sadly, families up and down the country and the NHS must brace themselves for reduced access to care services. If nothing changes, it simply won’t be affordable to continue to deliver the same services as now. We will carry on trying to get decision makers to appreciate the risks and implement a mitigation.

The Association of Directors of Adult Social Services (ADASS) has added its voice to The Care Provider Alliance in raising concerns about the impact of the Budget on people relying on care and support services.

“It’s likely some Councils will have to consider further rationing care and support, focusing on those people with the greatest needs. People waiting for care are likely to face further delays, risking their health deteriorating further and those paying for their own care may be forced to cut back on support due to increasing costs, making their lives more difficult. Some care providers say they will stop providing care in certain areas or stop operating completely because it’s no longer cost effective, reducing care available for people.”
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The County Councils Network has already issued a statement expressing their concerns about the latter.

Cllr Tim Oliver, Chairman of the County Councils Network, said: “The County Councils Network (CCN) will be carefully analysing the local government finance policy statement 2025/26 in the coming days, but on first glance the way government intends to distribute resources will be concerning for many county and unitary councils.

“Considering that increases in the minimum wage and National Insurance contributions will more than wipe out extra funds for social care, it is possible most CCN member councils – and many more across the country – will receive nothing from the ‘Recovery Grant’ which will be heavily targeted and weighted exclusively by deprivation. We are also very disappointed that the government have chosen to repurpose some grants and redistribute this funding elsewhere, which will adversely impact rural councils.

“As we have argued over the last few weeks, whilst deprivation is a key indicator of a councils’ need, it is not the only indictor nor the most important measure of financial distress. The reality is that it is demand and market failure across adult and children’s social care and special educational needs services that are pushing councils to the brink. With our previous analysis showing county authorities have a larger funding gap than metropolitan boroughs next year, our councils deserve an appropriate share of the Recovery Grant.

“The way these funds next year are to be distributed do not adequately account for many under-pressure councils’ actual and future demands and costs and with the government also committing to a fair funding review, we would be very concerned if this is the direction of travel moving forward. The government must ensure that this review is a genuinely fair funding review and based on a robust and independent evidence-base.”