Care England, the leading voice for adult social care in England, has responded to the Low Pay Commission’s Report on the National Minimum Wage (NMW) 2024, warning that without urgent government intervention, the sector faces an escalating financial crisis that threatens its survival.
The increase in NMW, while welcomed for workers, is not accompanied by sufficient local authority fee uplifts, leaving care providers to shoulder unsustainable costs. The 2024 Sector Pulse Check report revealed 85% of providers experienced that local authority’s failed to cover the increases to last year’s National Living Wage (NLW) uplift, leaving providers to make up the shortfall, placing immense strain on already fragile finances.
Despite government funding via the Market Sustainability and Improvement Fund (MSIF), the shortfall between local authority rates and the true cost of care provision for older persons residential services has grown to £2.24 billion in 2024/25, an increase of £400 million from the previous year. When combining this figure with what is required to future-proof the sector, the identified £1.76bn deficit in homecare services, and the unquantified gap for working age adult services – the total gap is significantly higher than £4bn.
Professor Martin Green OBE, Chief Executive of Care England, commented:
“The government cannot continue turning a blind eye to the social care funding crisis. While the National Minimum Wage increase is vital for care workers, it is meaningless without the funding to sustain it. Providers are already struggling to stay afloat, and we are now at a tipping point where closures and service reductions are becoming inevitable. If local authorities do not receive the financial support necessary to match wage increases, we risk the collapse of essential care services, leaving thousands of vulnerable people without the support they need.”
While increasing wages is essential to improving the attractiveness of the sector, the lack of parity with NHS pay continues to drive staff away. The Unfair to Care report highlighted that the average care worker earns £7,617 less per year than their NHS counterparts, reflecting a 35.6% pay gap. However, social care is also losing staff to other sectors, including supermarkets and hospitality, where wages are rising without the same level of responsibility and emotional demands. Without a targeted strategy to bring care sector wages in line with similar roles, recruitment and retention challenges will persist, leaving providers unable to fill vacancies and deliver high-quality care.
Care England’s advocacy was directly recognised in the Low Pay Commission Report, which cited its warnings on the financial impact of rising wage costs on care providers. The report reinforced Care England’s stance that without government-backed funding increases, the sector will be unable to sustain itself. The Commission acknowledged the unique pressures facing social care, noting that unlike other low-paying sectors, care providers cannot simply pass rising costs onto consumers. This official recognition underscores the urgency of the issue and strengthens Care England’s call for immediate action.
Care England is calling for a sector-specific wage settlement to ensure parity with NHS pay scales and stem the workforce exodus. Additionally, with increasing National Insurance Contributions, changes to international recruitment visas, and rising operational costs, many providers are already operating at a deficit.
Professor Martin Green OBE continued:
“The social care sector is on the verge of collapse, and the government must act now. If ministers are serious about delivering high-quality care, they must commit to properly funding the workforce. The continued failure to provide adequate financial support means providers are being stretched to breaking point. With mounting costs, policy changes, and a widening funding gap, the sector cannot survive without urgent government intervention. The government must ensure that local authorities receive the necessary funding to meet wage increases, anything less is a betrayal of the vulnerable people who rely on these services.”
Care England urges the government to:
- Ensure local authority fee uplifts match NMW increases or provide equivalent funding.
- Implement a sector-specific NMW increase to bring social care pay closer to NHS parity.
- Deliver a long-term workforce strategy that tackles recruitment and retention.
- Address the funding gap that has now widened to £2.24 billion despite previous interventions.
With one-third of providers considering exiting the market, the time for action is now. The government’s failure to prioritise social care funding is putting millions of people at risk and deepening the crisis in both social care and the NHS.