£3.25 billion homecare funding gap makes legal compliance challenging, warns Homecare Association

Homecare across the UK is now funded at levels that make legal compliance difficult, high -quality care undeliverable, and workforce sustainability unachievable, according to The Homecare Deficit 2025, published by the Homecare Association. 

Drawing on Freedom of Information requests sent to 276 public bodies, with 275 providing responses, the report provides the clearest evidence yet that chronic underfunding has reached a tipping point. It finds that 29% of councils and Health and Social Care Trusts now pay average hourly rates that fail even to cover the direct employment costs of careworkers at the minimum wage in each UK administration. 

“The figures show a system that no longer works — for the people who need support, for careworkers, for councils or for the NHS,” said Dr Jane Townson OBE, Chief Executive of the Homecare Association. 

“Homecare enables people to live well at home and reduces hospital pressures, yet it is commissioned at prices that make legal and safe delivery difficult. The result is a workforce leaving for retail and hospitality, and older and disabled people waiting longer for essential support.” 

Key findings: 

1. The UK faces a £3.25 billion annual shortfall to pay careworkers a fair wage, equivalent to comparable roles in the NHS, and keep providers sustainable: 

• £2.64 billion in England. 

• £320 million in Scotland.

• £135 million in Wales.

• £155 million in Northern Ireland. 

2. Only one public organisation in the UK pays at or above the Homecare Association’s Minimum Price for Homecare. 

3. The NHS pays less per hour on average for homecare than local authorities, even for people with more complex health needs, which require careworkers to have higher levels of training and supervision. Lower fees despite higher costs defies normal funding logic. 

4. Based on the data received, NHS bodies have reduced the hours of homecare they purchase since 2024. This supports concerns raised by the Association of Directors of Adult Social Services (ADASS) in its Spring Survey 2025 that NHS bodies are reducing or reclassifying Continuing Health Care (CHC) packages, shifting costs from the NHS to councils and individuals. This undermines the principle that NHS care should be free at the point of delivery.

5. 61% of councils and Health and Social Care Trusts, purchase too few hours per provider to sustain employment rights, efficient operation, and financial viability at average fee rates, with only 1% using block contracts that guarantee income stability. Hyper -fragmentation of homecare hours at low fee rates, driven by local authority cost -cutting, leads to insecure and exploitative employment conditions, poor quality care, and unviable services. 

6. The percentage of councils/HSC Trusts whose average rates fail to cover the direct costs of employing homecare workers (29%) has almost quadrupled since 2023, demonstrating the national picture of the social care sector. 

7. While underfunding spans all political administrations, Labour -run councils are over-represented among those paying below cost - reflecting both historic policy choices and the greater fiscal pressures in more deprived areas with higher care needs and lower tax bases. 

Homecare Association calls for coordinated action 

The Association urges governments across the UK to act immediately on three interdependent fronts: 

Funding and financial sustainability 

• Stabilise homecare budgets by ring -fencing social -care funding and investing at least £3.25 billion across the UK. 

• Provide certainty by requiring councils and NHS bodies to confirm fee rates annually by February, so providers can plan employment and training. 

• Ensure fair pay parity with NHS Band 3 roles and allocate funds for statutory sick pay and delegated healthcare tasks. 

 Legislative and regulatory reform 

• Legislate for a National Contract for Care, requiring commissioners to pay cost-reflective rates based on an agreed national methodology. 

• Develop a statutory workforce plan to secure sufficient trained careworkers to meet population ageing and reduce turnover. 

• Issue guidance to prevent inappropriate commissioning of unregulated or unsafe care. 

Commissioning and integration 

• Reform commissioning to replace competitive, minute -by-minute purchasing with geographic, capacity -based contracts that guarantee hours and support compliance with the Employment Rights Bill. 

• Integrate homecare into Neighbourhood Health Services, supporting community -based care and easing hospital pressures. 

• Review Ethical Care Charter councils to ensure commitments align with fair pay and legal compliance. 

“Underfunding social care costs the taxpayer far more through hospital delays and workforce loss,” added Dr Townson. “We are also seeing signs that some healthcare costs are being shifted from the NHS to councils, which were never designed to fund complex clinical care. This must be addressed if we are serious about integration.” 

She continued: 

“A fair price for care is not an optional extra - it is the foundation of a sustainable health and care system. Investing properly in homecare is both a moral and an economic imperative: it keeps people independent, relieves hospital pressure, and strengthens local economies.” 

ENDS  

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