Councils are “raiding” their financial reserves to fund rising costs of adult social care: King’s Fund

According to the report, published yesterday (8 April), care home provider fees paid by councils rose in real terms by an average of 3.6% to £1,823 a week for working age adults and for older people by 3.3% to £1,019 a week, compared with 2023/24's figures.

Homecare fees rose 3% to £23.56 an hour. Report authors noted this has come alongside councils now providing many more people with care.

Meanwhile, an additional 30,000 people received publicly funded long-term care in 2024/25 compared to the previous year, representing a 3% rise from 859,000 to 889,000.

In total, local authorities spent £34.5bn on social care, a real terms increase of 4.1% during the year.

In light of the increased spend, the report warned this has resulted in “the rise of external debt and fall in usable reserves”, as councils attempt to cover these increased costs whilst meeting their statutory obligations.

The report noted that councils are having to fund spending on social care through increases in charges on service users and cuts in other areas such as libraries, roads and waste disposal.

According to a Local Government Association survey, half of councils with social care responsibility say they are likely to have to apply for emergency government bailout agreements within the next three years.

Meanwhile, the King’s Fund report found that despite the increase in fees, and expanding the number of people receiving care, social care providers are also struggling to meet their rising costs and are charging privately funded clients more to help make ends meet.

The King’s Fund warned that the picture for social care “remains precarious”, and said it would put “significant pressure on the government to ensure stability in the sector in the medium term and on the Casey Commission to identify coherent proposals for funding and wider reform in the long-term”.

Baroness Casey has been tasked by the Government with recommending comprehensive reforms to the adult social care system in England.

This will be undertaken in two phases - with the first report to be published in 2026 and the final phase reporting back by 2028. 

Simon Bottery, Senior Fellow for Social Care, The King’s Fund, said: “Local authorities have gone to great lengths over the past year to fulfil their statutory obligations. They have spent more money on social care, with that investment not just going towards the increase in provider fees but also expanding the number of people receiving care.

“This will have improved the quality of life for the thousands of additional people now in receipt of care and given the challenging financial backdrop should be welcomed. However, it has come at great cost to local authority budgets and ultimately is not sustainable.

“We are long overdue a national conversation about how to properly reform social care so that it provides the support people need is organised and is funded in a way that does not put at risk other local authority services and their overall financial health.”

Lottie Winson