Homecare Association minimum price exposes England's homecare funding gap as new employment law takes effect

Homecare Association minimum price exposes England's homecare funding gap as new employment law takes effect

The Homecare Association has published its updated Minimum Price for Homecare in England, calculating what homecare providers need to deliver sustainable homecare services, which comply with employment and care regulations. This follows the National Living Wage increase to £12.71 and changes to Statutory Sick Pay coming into effect from April 2026. 

The updated Minimum Price shows the amount required by providers to pay careworkers the statutory minimum wage for all working time, including travel, waiting and training, mileage, and wage-related costs, plus the minimum contribution towards running a care business to meet quality and legal requirements.  

The Association warns that while Parliament has strengthened employment rights for careworkers, successive national funding decisions have failed to keep pace, and most councils and NHS bodies still pay well below the Minimum Price. Indeed, analysis of data obtained by the Homecare Association under freedom of information legislation shows 29% of public bodies are paying below the amount needed to cover direct costs of employing careworkers at the minimum wage. The Autumn Budget provided no additional investment for social care, and the Provisional Local Government Finance Settlement does not ring-fence or fully fund the costs of the Fair Pay Agreement or wider employment reforms. 

The Association stresses that this price is a minimum, not a fair price. It does not deliver parity with equivalent NHS roles or provide much financial resilience. Continued underinvestment will force more providers to hand back contracts, reduce capacity or exit local markets, leaving people without care at home and hospitals unable to discharge patients safely. 

Chief Executive of the Homecare Association, Dr Jane Townson OBE, said: 

"Ministers say they want higher standards of employment, better quality of care, and stronger regulation and enforcement. Quality, compliant, regulated care cannot be delivered on the cheap.  

"This is the minimum we calculate to be needed to ensure payment of the minimum wage to careworkers for all working time, including travel, waiting and training time, and to deliver safe and sustainable regulated care in people's homes. 

"Parliament’s new Employment Rights Act aims to improve employment conditions for careworkers and will add substantial additional costs for employers. National funding decisions have not kept pace with existing and new legal responsibilities. 

“The Autumn Budget delivered no new investment for social care, and the Finance Settlement leaves councils, NHS bodies, self-funding citizens, and providers expected to absorb the costs of the Employment Rights Act, including the Fair Pay Agreement. This is not a failure of local government. It is a failure of national funding policy.” 

“Ministers want care delivered closer to home, but commissioners across the system continue to buy homecare at prices that make legal compliance impossible. Government knows what homecare costs. Continuing to ignore that evidence will reduce availability of safe, good-quality homecare, deepen workforce shortages and undermine its own plans for neighbourhood health services.” 

Key findings 

Rising employment costs drive higher hourly rates 

Staffing costs represent at least 75% of the total cost of homecare delivery, and sometimes as much as 90%. The National Living Wage increase to £12.71 per hour does not just affect contact time rates; it triggers rises in National Insurance, pension contributions, holiday pay and wage rates for roles above the lowest paid. 

Shorter visits cost more 

The report shows that shorter calls are significantly more expensive per hour because of the higher proportion of travel time, waiting time and reimbursement costs. 

Despite this, commissioners still purchase care in short visits, which is worse for people accessing state-funded care, and inefficient for commissioners and providers. 

Workforce shortages deepen 

Skills for Care reported a vacancy rate of 9.7% in October 2025, over four times higher than the wider economy. 70% of providers who cannot meet demand cite difficulty recruiting enough staff. Retail and logistics roles now offer higher entry pay, creating wage drift that weakens both public and private markets. 

Hospitals feel the impact 

The NHS pays approximately £400 per night for an occupied bed, yet some NHS bodies choose to pay homecare rates below those set by councils. The Association of Directors of Adult Social Services (ADASS) reports that NHS organisations are reducing package sizes or reclassifying healthcare needs as social care needs to contain costs. 

Employment law outpaces investment 

The Employment Rights Act increases employment costs through expanded employer responsibilities, including Statutory Sick Pay (SSP), guaranteed hours and the introduction of a Fair Pay Agreement (FPA). 

These reforms strengthen protections for workers but expose structural flaws in local commissioning. Councils and NHS bodies continue to use spot purchasing and frameworks that pay for minutes rather than planned capacity, creating unpredictable income streams and preventing providers from offering secure contracts to their careworkers. 

Dr Townson continued: 

“The Government’s Ten-Year Health Plan depends on strong, reliable homecare capacity across public and private markets. That capacity will not exist while national budgets fail to fund the true cost of care. 

"Every £1 invested in social care returns £1.75 to the wider economy. Underinvestment does not save money. It shifts costs into the NHS and onto families.” 

Recommendations 

The Association calls on central government to:  

• Provide an immediate cash injection of £3 billion in England to ensure careworkers receive fair wages (NHS Band 3 with 2+ years' experience) and financial sustainability for providers.  
   

• Ensure a multi-year funding settlement for social care to meet future demand and cover the full cost of care (rising to an estimated £15.4 billion needed by 2034-35). 
   

• Implement a National Contract for Homecare that sets a minimum price for homecare, ensuring public sector commissioners pay a fair price to cover fair pay and the full cost of quality care. 
   

• Request local authorities and NHS bodies to confirm fee rates for the coming year by the end of February 2026.  
   

• Provide ring-fenced national funding to cover expanded sick pay, guaranteed-hours obligations and Fair Pay Agreement wage requirements. 

ENDS 

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Notes to Editor

1. The Homecare Association is the UK’s membership body for homecare providers, with over 2,200 members nationally. Its mission is to ensure society values and invests in homecare, so we can all live well at home and flourish in our communities. The Homecare Association acts as a trusted voice, taking a lead in shaping homecare, in collaboration with partners across the care sector. It also provides hands-on support and practical tools for its members. The Homecare Association's members agree to abide by the Association's Code of Practice. 

2. The Homecare Association’s Minimum Price for Homecare - England 2026-2027 report. The Homecare Association’s Minimum Price for Homecare represents the verified hourly cost of delivering safe, legal, and sustainable care, including fair pay and supervision.  

3. The Homecare Association’s Homecare Deficit 2025 report. The Homecare Deficit 2025 is based on Freedom of Information requests to 276 councils and Health and Social Care Trusts across the UK, with 275 responses received. 

4. In November 2025, the Government announced an increase to the National Minimum and Living Wage rates.

5. Skills for Care published the State of the Adult Social Care Sector and Workforce in England report. Which identified a vacancy rate of 9.7% in October 2025.

6. The ADASS Autumn Survey is an annual survey conducted by the Association of Directors of Adult Social Services (ADASS) and is sent to every Director of Adult Social Services in the 153 English councils with social care responsibilities.

7. UNISON’s Ethical Care Charter aims to ensure state commissioning of homecare is ethical, to improve the quality of services accessible to citizens and employment conditions for careworkers. The Charter includes a pledge to support fair pay for careworkers, payment of travel time and a focus on client need instead of ‘time and task’ commissioning. The Charter is available here.  

8. Local authorities and the NHS buy 70-80% of all care services (LaingBuisson 2024). 

• 96% of supported living. 

• 89% of care homes for younger adults. 

• 79% of homecare. 

• 57% of older people’s care homes. 

9. Employment costs, representing 70-80% of providers’ total costs, will surge by at least 10% in 2025-26. This is driven by increases in employers’ national insurance contributions and minimum wage requirements. We provide detailed analysis in our Minimum Price for Homecare 2025-26 report. 

10. Profitability in the state-funded sector has plummeted over the past decade (LaingBuisson 2024). 

• Homecare average EBITDA margins have fallen from 10.8% to a low of 5.2% in 2019, with some recovery to 7.6% in 2024. Recent data shared by LaingBuisson show average EBITDA margins in October 2025 at 6.3%.
• Care homes for younger adults have seen EBITDA margins halve from 26% to 13%.
• Older people’s care homes serving mainly state-funded residents have seen margins fall by 50%.

11. Despite some perceptions, private equity involvement in the care sector is limited. Just 12.2% of older people’s care homes; 10.1% of younger adult care homes; and 12.2% of homecare/supported living services are private equity backed.