A new care market report by LaingBuisson, commissioned by the Homecare Association and Care England, reveals a sector in a precarious financial state. Rising costs from Autumn Budget measures are threatening the viability of many providers. Providers serving the state-funded market are most at risk.
Contrary to some perceptions, private equity controls just over 10% of social care capacity overall. Small, local providers comprise 80-85% of the sector. They operate on thin margins, lack financial resilience and are very vulnerable. Data show that larger state-funded providers, too, may struggle to remain afloat.
The analysis reveals several critical factors threatening sector sustainability:
- Local authorities and the NHS buy 70-80% of all care services. The fee rates they pay now are too low to cover costs.
- 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.
- Providers cannot pass on these increased costs as local authorities and NHS bodies, their primary customers, fix prices. Many councils cannot balance their books and directors of Adult Social Services must cut budgets by £1.4 billion.
Click below to read the full report.
LaingBuisson Adult Social Care Market Report 2024
