Adult social care needs £3.4bn annual funding boost by 2028-29 to stand still, says report

Adult social care in England needs an extra £3.4bn in real-terms annual funding by 2028-29, at a “bare minimum”, to deal with rising demand and increased costs, an analysis has found.

Councils would need an extra £6.4bn annually by 2028-29 if they wanted to also reduce unmet need for care, and an additional £8.7 to tackle low pay in addition, said the Health Foundation in a report issued today.

The study comes ahead of next month’s government spending review, which will set public expenditure limits from 2026-29 and is expected to provide a tight settlement for councils.

Tight spending settlement expected for councils

According to the independent Office for Budget Responsibility, services other than the NHS and defence, including local government, could face real-terms cuts in their budgets due to the spending envelope the government is working within.

In its analysis, the Health Foundation assessed the trajectory of net current expenditure on adult social care, which includes all council spending on the service, excluding client contributions and expenditure on capital projects, plus transfers from the NHS through the Better Care Fund.

This was £26.9bn in 2023-24 (in 2024-25 prices). Though figures are not yet available for 2024-25 and 2025-26, the Health Foundation assumed that spending would have grown by 2.8% in real terms in each of those years, in line with the average annual growth in net current expenditure since 2014-15. This yielded a total spend of £28.4bn.

The think tank then calculated the impact, since 2023-24, on required spending of rising costs, such as increases in the national living wage (NLW), and of increasing demand from an ageing population, based on estimates made by the Care Policy and Evaluation Centre.

£3.4bn extra needed by 2028-29 to stand still, finds study

Based on these, it projected that expenditure would need to rise to £31.8bn by 2028-29 (in 2024-25 prices), the end of the spending review period.

The report also provided two further scenarios, both of which involved adjusting funding levels to meet some existing unmet need, with the final model also allowing for an increase in pay.

Scenario two involved modelling the impact of a 10% increase in the number of care packages councils delivered from 2023-24 to 2025-26 – equivalent to about 90,000 packages – to account for some reduction in unmet need.

Along with the projected increases in demand and cost from scenario one, this would result in authorities having to spend £34.8bn by 2028-29 (in 2024-25 prices), an increase of £6.4bn in real-terms than on the Health Foundation’s estimate for 2025-26 expenditure.

In the final scenario, the think tank also modelled the impact of the sector raising minimum pay to NHS Agenda for Change band 3, under which staff currently earn £13.13 an hour after two years’ service, above the existing NLW of £12.21. In this case, funding would be £8.7bn higher in 2028-29 than 2025-26.

Casey Commission underway

The report comes with the government’s Independent Commission into Adult Social Care – headed by Baroness (Louise) Casey – having started work on developing plans to reform the sector.

It is due to produce an initial report next year, setting out a 10-year plan to develop a ‘national care service’, and a further report in 2028, outlining an even longer-term strategy for adult social care. However, the Casey Commission’s initial report must reflect the constraints of the 2026-29 spending review, the Department of Health and Social Care (DHSC) has said.

The Health Foundation’s director of policy, Hugh Alderwick, said: “The spending review is a chance for the government to signal its commitment to improving social care by providing a down payment on the investment needed for reform.

“This would help people get the support they need, ease the burden on unpaid carers, provide a fair wage to care workers, and support the NHS.”

Investment in social care ‘will save money in long term’

For the Association of Directors of Adult Social Services (ADASS), president Jess McGregor said the Health Foundation’s report showed that the government needed to commit to “ambitious reform and proper investment” to “improve quality [and] access and attract people to work in care and support”.

“This will save money in the long term because good social care enables us to live safely and stay independent in our homes for longer, it reduces pressure on our NHS by preventing people reaching crisis and needing hospital and allows people to continue to work and care for others,” she added.

“As the Casey Commission kicks off and we await the spending review, now is the time for the government to show courage and drive forward its agenda on adult social care to create a care system for older and disabled people that we can all be proud of and to create a legacy for future generations.”