The rising costs of providing care, combined with insufficient government funding, are pushing care providers to the brink. Experts predict that the collapse of these services could overwhelm families and the NHS, while forcing local councils into financial insolvency.
Wage: Increases Push Care Sector to the Brink
The Upcoming increases in the minimum wage and employers’ national insurance are predicted to raise employment costs by 10% in the next financial year. For many providers, whose profit margins are already razor-thin, these changes could spell the end of their operations.
Small, locally operated providers are particularly vulnerable. With 80% of care services funded by the NHS or local councils, the fees paid often fail to cover costs. According to Care England, when care companies fail, it is not just businesses but entire support systems that collapse, leaving those in need of care unsupported. Martin Green, Care England’s CEO, stated, “The human and economic cost will be devastating.”
Meanwhile, councils themselves are struggling. Reports indicate that local authorities face a £54 billion funding shortfall over the next five years, driven partly by rising care costs. If providers go under, councils would have to directly deliver care, potentially leading to insolvency.
Experts Urge Government Action to Avert Crisis
Healthcare associations are calling on the government to intervene with immediate investment to stabilize the sector. The Homecare Association and Care England have proposed a £2.8 billion package to offset the impact of wage changes and other rising costs. They argue that such investment would not only preserve services but also generate long-term savings, every £1 spent on care is estimated to save £3 in downstream costs.
Dr. Jane Townson, CEO of the Homecare Association, has warned of the cascading effects if the crisis remains unaddressed. She 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 ”
In response, a spokesperson of the Departement of Health and Social Care said “We are tackling the challenges facing adult social care and taking the first steps towards building a National Care Service by introducing legislation that will establish the first ever fair pay agreement for care professionals and increasing the Carer’s Allowance earnings threshold by over £2,300 – the biggest rise since the 1970s”. The Departement of Health and Social Care also added that they are giving local authorities an additional £3.5 billion in 2025-26, including a £680m increase in the social care grant to support the sector.
However, experts argue that these measures fall short of what is needed to address the immediate crisis. The stakes are clear : without decisive action, the UK’s care system faces a breakdown that will ripple across families, local councils, and national healthcare services.
