Social care: funding and workforce Contents

1Current funding problems in social care

The current situation

11.Unlike the NHS, social care is not free at the point of use. Anyone with assets—including in some cases their home—worth more than £14,250, has to pay for their own social care. Local authorities fund social care for people with assets below this threshold.9 The first part of the social care funding problem described by the Secretary of State and other witnesses, is the adequacy of local authority funding for social care.

12.Successive governments have attempted to address local authorities’ need for more funding for social care through a series of different, short term grants and funding mechanisms.10 However, despite numerous calls for this, to date there has been no long-term funding commitment for social care.11

13.The following graph provided by the House of Commons Library shows how funding for local authority funded social care has changed over the last ten years.12

Net current expenditure on adult social care

Sources: MHCLG Local authority revenue expenditure and financing and HMT GDP Deflators June 2019

14.Although in absolute terms there is now more funding available, demand has grown over the same period meaning the money has had to go further.13 The number of older people receiving publicly funded social care fell by 400,000 between 2009–10 and 2015–16.14 Between 2015–16 and 2018–19, the older population increased by nearly 468,000, but the number of older people receiving social care fell by a further 37,000 during the same period.15 According to the Health Foundation, taking into account an ageing population, spending per person on adult social care services has fallen in real terms by around 12% between 2010–11 and 2018–19.16

Comparisons with other countries

15.According to OECD data, the UK Government spends less on social care than the EU-14 average:17

OECD data graph

16.While some southern European countries spend less than the UK, witnesses explained that in these countries have a long tradition culturally of family-based support and has comparatively low levels of female participation in the labour market.18

17.Social care funding and provision is a devolved matter; therefore, this report is concerned with social care funding in England. The Health Foundation estimate that the amount spent in England per person on social care has dropped to around £324 per person in 2017–18, less than spending on publicly funded social care in both Scotland (£446) and Wales (£424).19

18.The COVID-19 pandemic has exacerbated the financial burden on the social care sector. The LGA quantify this in their written evidence:

Extra COVID-19 costs and losses of income incurred by councils in March, April and May, amounted to £3.2 billion. This has been met in full by the two tranches of emergency funding provided by government to councils so far. Councils could need as much as £6 billion more to cover the financial impact of coping with the coronavirus pandemic during this financial year. This figure will need to be kept under review. The MHCLG survey assumes things return to normal from July. If councils have used this assumption in their returns, then this figure could rise. Councils need an assurance that all additional costs and losses incurred as a direct result of COVID-19 will be funded by government.20

Interface between health and social care

19.Social care and health care are inextricably linked. Many people who need social care need it because of health problems, and people often need social care on discharge from hospital. The differences in the funding models and the delivery of social care and health care lead to difficulties and barriers when people transition between the two. These problems include hospital patients who are ready to be discharged having to wait for appropriate social care to be arranged. Not only does this result in a poor experience for individuals and their families, it also creates hospital flow and capacity issues and consequently also financial problems for the NHS. The NHS has improved its performance on delayed transfers of care, which have fallen by 24% since 2017. However, they have begun to rise again with 22% more delayed days reported in February 2020 compared to the previous year.21

The impact on people who need social care

20.At our first evidence session, we heard powerful evidence from Anna Severwright, a 34 year old user of social care services, who described the choices she faces on a regular basis; having to decide whether to use her allotted social care funding to have a shower, go shopping, or go out with her friends. Her story can be read at the beginning of this report.

21.We were also privileged to hear evidence from Kevin Caulfield, a Disabled person and wheelchair user with PML, a rare neurological condition. He is a disabled activist who formed the Disabled People’s Commission in Hammersmith and Fulham and is now Strategic lead for co-production in that borough. He highlighted the risk of people going into debt to fund the care that they need:

It absolutely cannot be acceptable in the 21st century that people are falling into debt to pay for the support that they need and end up in the legal system as a result. That is a fundamental issue that needs to be addressed.22

22.Daphne Havercroft also shared with us the experiences of her mother Dorothy’s care in the last year of her life, which she felt was driven by cost savings. After Dorothy was admitted to hospital, in common with a lot of older people, she wished to return home with a care package in place rather than move to a nursing home. However, this did not happen, despite the involvement of a total of 101 different people in trying to co-ordinate her care. Her daughter Daphne told us that her assumption was that Dorothy was not able to return home because neither the NHS nor the local authority were willing to fund the package. Instead, Dorothy remained in hospital awaiting discharge before eventually being transferred to a nursing home where she spent 6 months, and from which she had 3 emergency admissions to hospital. In Daphne’s own words:

My perception was that the priority of the hospital discharge teams and community health and social care teams was to spend as little money as possible to support an old lady to live at home safely and help her avoid repeat hospital admissions. I think their cost-saving attempts had the opposite effect. That is evident from her three emergency hospital admissions, the use of the better care fund to keep her in an appropriate residential care setting for six months and the cost of the involvement of 101 people in her case.23

The impacts of social care funding shortages on those who need social care were also described in the written evidence we received.24

23.Unmet need is frequently raised as a major problem in social care.25 Described by the LGA as ‘rationing’ and ‘prioritisation’, local authorities now restrict funding for social care to those with the most severe needs, meaning that individuals who might previously have been eligible for Government-funded care now either have to self-fund, rely on family, or go without.26 According to the Health Foundation, over 400,000 fewer older people accessed publicly-funded social care in England in 2013–14 than in 2009–10, a 26% fall despite the rise in the population of older people over the same period.27 There is no agreement about the overall level of unmet need, but Age UK has a widely-quoted figure of 1.4 million older people who are not getting the care and support they need, an increase of 19% in two years.28 Sarah Pickup, Deputy Chief Executive of the LGA, gave more detail:

A lot of unmet need is because of unmet need for care eligibility, not financial eligibility. That is the main reason, I think, for people not receiving services. They do not cross the “substantial and critical” threshold.29

24.Quality of care is also impacted by funding shortages. The CQC states that the majority of care remains of a high quality.30 However, this differs between settings and ADASS found in 2019 that 66% of Directors of Adult Social Services reported quality challenges due to funding pressures.31 The CQC has also identified concerns around providers ceasing to take local authority clients or staff turnover resulting in disrupted or poor quality care.

25.As well as this, evidence from the homecare sector in particular highlighted the impact that funding shortages have on the commissioning relationship between local authorities and social care providers, particularly by creating a “pay by the minute” model which was said to have an adverse affect on social care workers’ ability to provide the best possible care:

We have seen things like pay by minute for homecare. Whoever thought that the critical role of compassion and care can be broken down into paying people by the minute? Out of good will, people are not being paid for walking up someone’s garden path or waiting to get in to see the most vulnerable people… it makes you feel that no one trusts you… [Raina Summerson, Agincare Group]32

We need to focus on outcomes on a system-wide basis and not just reduce everything to cost and minutes. We must get away from time and task, and look at population level at outcomes and at individual level at outcomes, and then do a sensible calculation of the costs and benefits of different models. [Jane Townson, UK Homecare Association]33

26.This was echoed in evidence from the Local Government Association who agreed that there is “a mixed picture” of social care commissioning by local authorities but suggested resource constraints mean local authorities cannot always achieve the outcomes they want:

The resource and capacity constraints that councils have faced are not always conducive to working in the way that commissioning ideally should work, because people are worried that if they talk to providers about what they aspire to, and to people about what they aspire to, what they will aspire to will be way more than the council can afford. [Sarah Pickup]34

Impact on the workforce

27.The funding difficulties in social care translate directly into the social care workforce; over 20% of care workers are paid only the National Living Wage, with 1 in 5 care workers under the age of 25 paid less than this, and the proportion of care workers paid on or above the Real Living Wage has decreased significantly from 25% in September 2012 to just over 10% in March 2019.35 The issues facing the social care workforce are discussed in further detail in Chapter 2, but it is clear that fair pay for social care workers must be an integral part of our long-term funding settlement for social care.

Impact on the care market

28.Social care is delivered by thousands of mainly private companies. Local authorities have been trying to limit how much they pay for services, but providers have been adversely affected by increasing costs, especially for staff as a result of the minimum wage. The result is an increasingly unstable market with growing numbers of providers going out of business or handing back contracts. In addition, some providers are focusing on services for people who fund their own care, and who will pay more. Care providers closing, or closing to local authority residents has a direct impact on those needing care, reducing choice, and in the most extreme cases forcing service users to move to a different care home. ADASS describes this impact:

We have seen in the last year some 5,000 people affected by hand-backs of contracts to local authorities as a result of providers ceasing to trade. We estimate that currently perhaps a third of all providers are making a loss, and that might rise.36

29.Jane Townson of the UK Homecare Association explained to us the issues they face with local authorities paying providers rates that do not even cover their costs:

We have 13 councils paying less than £15 an hour. That does not even cover the national legal minimum wage and statutory employment on-costs. We believe it should be illegal for councils to purchase care at rates as low as that. Eighteen councils have not given any inflationary uplift to cover the 6.25% increase in NMW that we had in April.37

30.Local authorities also argue that the lack of a long term funding settlement also prevents local authorities from commissioning effectively and shaping the care market.38

31.Oonagh Smyth of Skills for Care also pointed out that social care is an important part of the economy and needs to be recognised as such:

We need to realise that the social care sector is a significant contributor to the economy. It contributes £40 billion a year, and we need to start seeing it as a significant sector, employing 1.5 million people, supporting 1 million people a year and contributing a significant amount to the economy.39

32.It is clear from the evidence we have heard that funding shortfalls are having a serious negative impact on the lives of those who use the social care system, as well impacting the pay levels of the workforce and threatening the sustainability of the care market. An immediate funding increase is needed to avoid the risk of market collapse caused by providers withdrawing from offering services to council-funded clients and focusing exclusively on the self-pay market.

Funding estimates for social care

33.The current level of funding for social care therefore neither meets the expectations society has for the way older and vulnerable people should be treated, nor makes provision for future pressures caused by both demography and rising wages. Calculating how much money is needed to resolve these issues is complex with different estimates put forward by a number of organisations in recent years. Written evidence to this inquiry has provided useful updates to these figures. These are set out in the table below. It should be noted that these estimates do not take into account the added costs necessitated by the COVID-19 pandemic, which have been calculated separately by ADASS at close to £6 billion.40 The figures also relate only to funding the existing, means-tested social care funding system adequately and sustainably. They do not cover the costs of more fundamental reform to the means-test, which is discussed in more detail in Chapter 3.

Annual funding increase required

What it would cover


£1.4 bn

Ensuring all care staff are paid the Real Living Wage (currently £9.30, and £10.75 in London)

Resolution Foundation


Meet future demand–this is the base option where additional funding provided keeps up with underlying demand from an ageing population. [2023–24]

Health Foundation

£3.9 bn

Increase pay - delivering the planned increases in the National Living Wage for care workers with a small pay uplift of 5%, in line with the uplift given to NHS staff [2023–24]

Health Foundation


Meet demand and increase care provision by 10%. This could be used to increase the amount of care people already receive or expanding care to more people. [2023–24]

Health Foundation


Provide local authorities with additional funding to pay higher costs for care packages–for example to cover higher hourly rates for providing domiciliary care, or higher weekly rates for providing residential and nursing care. [2023–24]

Health Foundation


Increase care provision and provide funding for higher costs for care packages. [2023–24]

Health Foundation

£7.9 billion

Address the ‘provider market gap’ (the difference between what providers say is the cost of delivering care and what councils pay) and ‘core pressures’ (inflation, demography and the National Living Wage). It is projected on the basis of maintaining 2019–20 levels of access and quality.

Local Government Association


To restore care quality and access to 2009–10 standards, addressing the increased pressure on unpaid carers and local authorities and the unmet need that has developed since then

Lords Economic Affairs Committee


Recover peak spending levels [2023–24]

Health Foundation


Recover peak spending levels and pay increase [2023–24]

Health Foundation

34.The Health Foundation estimate that simply meeting the growing demand caused by an ageing population will cost £2.1bn per year. Delivering the planned increases in the National Living Wage for care workers with a small pay uplift of 5%, in line with the uplift given to NHS staff, will increase this figure to £3.9bn per year. In order to increase access to social care by 10% an extra £4.4bn would be needed, separate to any pay rises, but to ensure the sustainability of the care market would require an increase in the annual budget of £5.5bn per year by 2023–4. Going further, the Health Foundation estimate that a funding increase of £7.7bn would increase access to social care, and would have a potentially positive impact on workforce numbers and pay, provider sustainability, and the quality of care. This is slightly lower than, but broadly comparable to, the estimates put forward both by the Lords Economic Affairs Committee, and by the Local Government Association.

35.The crisis in social care funding has been brought into sharp focus by the COVID-19 pandemic, and this must now be addressed by Government as a matter of the utmost urgency. The funding increase we are calling for is significant at a time when public finances are likely to be stretched, but the pandemic has made it clear that doing nothing is no longer an option. Providing adequate funding for social care will also help the NHS, and may itself have positive economic and long-term social impacts, given that social care is an important part of the economy.

36.We believe the starting point must be an increase in annual funding of £3.9bn by 2023–24 to meet demographic changes and planned increases in the National Living Wage. However such an increase alone will not address shortfalls in the quality of care currently provided, reverse the decline in access or stop the market retreating to providing only for self-payers. Further funding to address these issues is therefore also required as a matter of urgency.

37.Alongside such a long term funding settlement we strongly believe the government should publish a 10 year plan for the social care sector as it has done for the NHS. The two systems are increasingly linked and it makes no sense to put in place long term plans for one without the other. Failure to do so is also likely to inhibit reform and lead to higher costs as workforce shortages become more pronounced with higher dependency on agency staff. Reducing the 30% turnover rates typical in the sector will also require a long term, strategic approach to social care pay and conditions.

9 £23,250 is the upper capital limit and £14,250 is the lower capital limit. For more information see House of Commons Library, Adult Social Care: Means-test parameters since 1997

10 Department of Health and Social Care (SCF0069)

11 Several organisations have called for such a long-term commitment to be provided, including the LGA and Health for Care, a coalition of 15 NHS and healthcare organisations including NHS Confederation, NHS Providers and the Royal College of Physicians.

12 House of Commons Library, Adult Social Care Funding (England), September 2020

14 Health Foundation (SCF0044)

15 King’s Fund, Social Care 360

16 Health Foundation (SCF0044)

17 The Health Foundation (SCF0113)

18 Q32 Anita Charlesworth

19 The Health Foundation (SCF0044)

20 LGA (SCF0022)

21 House of Commons Library, Adult Social Care Funding (England), September 2020

22 Q109 Kevin Caulfield

23 Q1 Daphne Havercroft

24 Written evidence, see, for example, Care and Support Alliance (SCF0032)

25 Written evidence, see, for example, LGA (SCF0022) Age UK (SCF0041)

26 Q152 Sarah Pickup, James Bullion

27 Health Foundation, (SCF0044)

28 Age UK, press release 2018.

29 Q161 Sarah Pickup

31 ADASS, ‘ADASS Budget Survey’, 2019

32 Q66 Raina Summerson

33 Q81 Jane Townson

34 Q154 Sarah Pickup.

36 Q153 ADASS

37 Q77 Jane Townson

38 Qq154–155 ADASS, LGA

39 Q100 Oonagh Smyth

40 ADASS (SCF0099)

Published: 22 October 2020