Collaborate and find common language’ councils and care providers urged

Transform Magazine spoke to Richard Ayres, Social Care Advisor at Care England, about the outlook for the adult social care sector in 2025 and beyond. While far from rosy, glimmers of hope exist in some areas if both local authorities and care providers work collaboratively on solving commissioning challenges, especially if they agree on a common language and currency to find solutions.

The time of writing, the biggest issue facing the adult care sector was the planned increase to Employers’ National Insurance Contributions (ENICs) announced in the November 2024 budget. This will increase social care providers cost base in 2025/26 by an estimated £940m, with a further £1.85bn added on the total wage bill in 25/26 due to new National Minimum Wage (NMW) rates from April 2025, according to think tank Nuffield Trust.

One Bristol-based provider explained that the changes would have a devasting effect: “The increase in ENICs and minimum wage will reduce our revenues meaning that we will have to hand back local authority contracts, senior care staff won’t receive pay rises and the quality of our services will be reduced.”

Care England’s Ayres says the ENICs changes will be the final straw for some providers in an industry that has been “on its knees for a decade”. He says the changes threaten to bankrupt more than twenty per cent of adult care providers overnight on paper from April 1 if commissioners are unable to fund inflation, NMW and ENIC changes.

The ENICs increase aside, the challenges faced by the sector in recent years have been and continue to be manifold. Local authority older persons care packages have long been underfunded and subsidised by self-funders. Additionally, the cost of providing care to an ageing population with increasingly complex health needs has also risen in the past decade compounded by the home first approach to commissioning. The industry faces huge workforce challenges too with both its domestic attrition and international applications dropping due to changes in immigration rule changes, which brings an additional financial and resource burden.

“In 2021, Skills for Care found it cost £6,222 in the first twelve months to recruit, train and retain someone in adult social care, with about 40 per cent leaving in year one. This situation has been exacerbated by the March 2024 changes that meant international workers can no longer bring their families with them when working in social care except the NHS. This means we have seen a drop in international applications from 105,000 in 23/24 to just 18,000 in Q1 and Q2 of 24/25, so we are expecting a significant rise in agency costs over this year,” Ayres explains.

The latest Sector Pulse Check Report 2024 by Care England and learning disability charity Hft, carried out ahead of the announced ENICs changes, found that three in ten providers had already been forced to close parts of their organisations or hand back contracts to local authorities. One-third were considering leaving the market altogether, while more than a third (37 per cent) said they had curbed investment into building future capacity for care.

The situation is set to worsen still further with the incoming Employment Rights Bill and Fair Pay Agreement which will place additional strains due to proposed changes around terms and conditions such as zero-hours contracts and statutory sick pay, as well as an enhanced pay rate for the sector without a clear commitment by government to fund it.

Of the issues highlighted, one of the most problematic is the underfunding of local authority commissioned care. “There is a £4.8bn funding gap between what local authorities pay for older person’s care and what care costs, which increases annually with sub-inflation annual fee uplifts by commissioners,” Ayres explains. He adds that the adult social care sector has not been helped by a flaw in the Care Act 2014 which has allowed local authorities to set personal budgets at a level they are able to buy care at locally. Where some providers may have underpriced in the past to avoid an empty bed, Ayres says this has set false expectations in some cases of the price for care and legitimises commissioning behaviour.

“These rates do not largely reflect the cost of delivering care and, additionally, the cost of delivering care has not historically considered the need to make a profit to reinvest in services to sustain capacity longer term, or elements such as staff development and training and becoming carbon neutral, for example,” he adds.

To start to tackle the problem, he believes changes need to be made. “The industry has reached a point where care providers need to say no to underfunded care packages and that is going to force local authorities to meet the cost of care which allows reinvestment into the sector to meet the needs of local authorities and an ageing population. Local government will fall under pressure as a result in much the same way care providers are under financial pressure to sustain their services.

Unfortunately, it seems that we have either got to see a mass of care providers fail or a mass of local authorities fail before central Government will act,” Ayres says.

Ayres has sympathy for local government which he likens to a game of ‘whack-a-mole’. “It has been laboured with a problem and statutory duties which dictate it needs to address the problem but without the resources from Government to do so in one of its largest spend areas that is going to become quickly unstable and unviable. Working in a local authority is a bit like playing whack-a-mole, you whack one mole down that you think is solving a problem but then five others pop up which were not necessarily predicted. Short-term solutions often lead to longer-term problems, for example austerity saw the end of prevention in many areas which local government now say is what’s needed to solve the problems we face today.”

Further issues are going to arise in future years due to already financially pressed care providers not being able to invest in their properties.

“Properties housing public-funded residents tends to be the older less modernised stock incapable of decarbonisation, with inefficient layouts, which are also less attractive to selffunders and more likely to close due to viability. This stock is being replaced with new more attractive stock which is appealing to the private pay market but results in less publicpaid capacity availability. The investment case to build new state of the art stock does not stack up for public funded residents only,” Ayres says.

He adds: “We need central Government to give local government ring-fenced funding that is aimed at fixing the social care problem, with an eye on the impact of longer-term outcomes for future sector sustainability.”

Currently, it appears Central Government is making slow progress on the issue. In January 2025 an independent care commission review into adult social care chaired by The Baroness Casey of Blackstock DBE CB was announced. While Care England have welcomed the review, the organisation has also warned that waiting until 2028 for another sector report to confirm what is already known is an unnecessary length of time and a grave error of judgment.

One possible interim alleviator which is backed by Care England through its partnership with notfor-profit local government consultancy iESE, is the use of CareCubed, an online care pricing benchmark tool which can help care providers and local authorities come to an agreement on the fair costs of care. “The CareCubed model offers a common currency. Sixty per cent of local authorities are using it. We encourage care providers and local authorities to sign up to CareCubed to get to that common currency and to understand what it really costs to provide services. Unless you give the local authorities the information in a format they can digest, they don’t know what data to look at.”

Additionally, Ayres encourages local authorities to engage with their local care market because he believes that working collaboratively would be more likely to solve their problems. “The solutions sit in the local care provider community so tap into them and if you don’t know how to tap into them work with the local care provider association or speak to Care England and we will help co-ordinate a group of voices. I don’t think any local authority wants to undercut care providers – they want to use their budget to their best of their ability to provide as much care as possible for the lowest possible amount. Using CareCubed will help jointly agree a fee that is appropriate and sustainable.”