£4bn a year more available for adult social care by 2028-29 in spending review

Chancellor Rachel Reeves has made over £4bn a year more available for councils to spend on adult social care in 2028-29 compared with this year in the government’s spending review, delivered yesterday.

The funding has been made available by real-terms increases in funding for local authorities from 2026-29, along with a boost to the amount the NHS spends on adult social care through the Better Care Fund (BCF).

However, the funding is reliant on significant year-on-year increases in council tax, while it is not clear how far delivering the £4bn-plus boost to adult social care requires a squeeze on other services, including those for children.

Also, sector bodies warned that the additional funding was little more than what was necessary to keep pace with demand and left little over for ministers to invest in their planned fair pay agreement for adult social care staff, which Reeves cited in her spending review speech yesterday.

They also said it imposed significant constraints on Baroness (Louise) Casey, whose Independent Commission into Adult Social Care is due to publish a report next year setting out a plan for delivering a so-called ‘national care service’ over the next decade.

Real-terms funding boost in councils’ spending power

Reeves provided councils with a real-terms boost in their “spending power” – the total amount available to authorities to spend – of 2.6% per year, taking it from £69.4bn in 2025-26 to £79.3bn in 2028-29, adjusted for inflation.

While this is above average compared with the overall increase in public spending from 2026-29 – 1.2% per year in real terms – it is reliant on authorities increasing council tax by 5% per year in each of the three years. This comprises 3% in standard council tax and 2% for the adult social care precept, which is ring-fenced for the sector.

According to think-tank the Institute for Fiscal Studies, over 80% of the projected rise in council spending power over the period will come from council tax, as opposed to government grants. However, some authorities may not be raise council tax by the required amount due to the risk of a public backlash.

Extra £4bn plus for adult social care

The extra £4bn-plus made available adult social care by 2028-29 comes in part from the local government settlement and also from increases in the NHS’s contribution to the sector through the BCF, an integrated fund designed to provide mutual benefit to health and social care services.

The NHS spent roughly £3bn on adult social care in 2023-24 via the BCF out of a total net expenditure on the service of £26bn.

However, in saying that the funding would be made “available” for adult social care, the government has made clear that it is not guaranteed for the service.

Notably, it is not clear how far delivering the £4bn-plus would involve squeezing children’s social care, given the government currently allocates some funding to both services through a single social care grant.

The Treasury said the settlement would “support the sector to improve adult social care”, with further details on this set out shortly.

Settlement ‘only enough to prevent service decline’

The projected increase in resource is only slightly higher than the £3.4bn extra annually that think-tank the Health Foundation calculated would be needed by the sector by 2028-29 as a “bare minimum” to deal with rising costs and increased demand.

Following the spending review, its chief executive, Jennifer Dixon, said: “An overall increase in funding of £4bn for social care by 2028-29 is only enough to prevent a further deterioration in services and will not be sufficient to fund increases in pay or improve access to or quality of care.”

As well as the costs of meeting future demand, there is evidence that services are insufficiently funded to meet current pressures. For example, the Homecare Association recently published analysis showing that council fees for 2025-26 were £1.6bn short of what was required to meet providers’ minimum costs, including paying staff the national living wage (NLW).

The government is planning to legislate for a fair pay agreement for the sector through its current Employment Rights Bill, which would create an Adult Social Care Negotiating Body to set pay and conditions for staff, with ministerial sign-off.

However, while Reeves mentioned this in her speech, there was no specific funding allocated to deliver improved pay and benefits for staff through the agreement.

Pay boost for care staff ‘will require cuts to other services’

“Plans for a fair pay agreement for care workers are welcome, but with tightly constrained finances, councils could only fund this by cutting into other budgets,” said Sally Gainsbury, senior policy analyst at think-tank the Nuffield Trust.

The Homecare Association, which represents domiciliary providers, issued a harsher message.

“This government talks about ending exploitation, shifting care closer to home, and building a high-wage economy,” said its chief executive, Jane Townson. “These are laudable aims which we fully support. But announcing a fair pay agreement without any serious funding plan is pure theatre. Providers cannot magic money from the ether. Without investment, these policies are hollow and unworkable.”

For the King’s Fund, chief executive Sarah Woolnough cited the importance of the fair pay agreement in attracting staff into the sector in the light of the government’s decision to end overseas recruitment of adult social care staff through skilled worker visas later this year.

However, she warned: “There is worryingly little detail of how much this would cost and if it would come out of the relatively small amount of additional funding announced for social care, which would leave little left for other fundamental improvements to our ailing system.”

The spending review also set the funding envelope – at least up to 2029 – for next year’s proposals from the Casey Commission for reforming adult social care. In its spending review document, the Treasury said Baroness Casey’s 2026 report would “focus on how to make the most of existing resources to improve the system”.

Casey Commission ‘unlikely to lead to transformation’

Gainsbury added: “We now know what money Baroness Casey will have to work with as she carries out her review on social care over the next few years, and it’s unlikely to lead to the transformation we were promised.

“Local government may find enough money to keep up with existing demands from today’s settlement, but that will only come by racking up council tax again, and little will be left for a programme of reform.”

The Association of Directors of Adult Social Services (ADASS) welcomed the extra money for adult social care announced in the spending review.

President Jess McGregor said it would “make an important contribution to the additional costs of adult social care, which is more in demand than ever and increasing in complexity as we are all living longer, often with multiple illnesses and disabilities”.

Extra cash ‘not a solution to longstanding issues’

However, she said the settlement “doesn’t solve longstanding issues such as access to care, workforce challenges and support for carers”, adding: “We need to press ahead with the Casey Commission to find solutions which can bring sustainable reforms for the long term and build a care system that is there for everyone, when we need it.”

The Care and Support Alliance, a coalition of charities for older and disabled people and carers, gave the spending review a lukewarm reception. While welcoming the additional resource, its co-chair, Jackie Sullivan, executive director of strategy and influence at Mencap, said: “Until we are able to scrutinise the detail it is unclear just how generous this really is, given ever increasing pressures on social care costs and growing numbers of older and disabled people in our society.”

£100m to support adults with complex needs

Alongside the boost in councils’ spending power, the government also allocated £100m, from 2025-28, to new community health partnerships, to support adults with complex needs, as part of a wider government transformation fund.

On this, the Treasury said: “By working closely with local areas to tackle barriers and change incentives, the new community help partnerships will bring together a range of services, providing better support for adults in crisis and reaching vulnerable individuals earlier, before problems escalate.”

Though there were no further details on the plan, it was welcomed by ADASS.

“We look forward to working and learning with government as we seek to make best use of that funding with our local partners,” said McGregor.