The Financial Crisis in Social Care: The Impact of Wage Increases on Providers
The adult social care sector is facing an unprecedented financial challenge, as highlighted in the latest Skills for Care Report. According to recent findings, 58% of care workers are currently earning below the upcoming National Living Wage (NLW). This significant wage gap presents a serious financial strain on care providers, who must increase staff pay, compete with other sectors, and ensure fair pay progression for senior staff, all while trying to maintain high-quality care services.
The Growing Funding Gap
Earlier this year, Care England, in collaboration with Hft, published its Sector Pulse Check, revealing that 85% of care providers reported that local authority fee increases did not cover the rising NLW costs. This gap leaves providers struggling to balance financial stability while ensuring their workforce is paid fairly. The financial strain is further exacerbated by rising operational costs, increased Employer’s National Insurance contributions, and ongoing challenges in international recruitment.
Without adequate government funding, many providers risk closure, which would have devastating consequences for both care workers and the millions of individuals who rely on essential care services.
A Workforce in Crisis
Professor Martin Green OBE, CEO of Care England, has expressed deep concern about the worsening workforce crisis in social care. He emphasised that while pay increases are necessary, they are currently unfunded, placing additional pressure on an already fragile sector. He stated:
“Providers are running to try and keep up with the National Living Wage increases, however, they are standing still due to competition from other sectors, and the lack of pay progression they can provide to their staff due to funding constraints. Care providers are caught between rising wage costs and insufficient money to fund them. Many are already struggling to recruit and retain staff, and with further financial pressures, the situation is only going to worsen.”
Pay Progression and Staff Retention Challenges
The Skills for Care Report also highlighted a troubling statistic: in December 2024, there was only a 4p pay difference between care workers with over five years of experience and those with just one year. This lack of pay progression not only demotivates experienced workers but also pushes them to leave the sector in search of better-paying opportunities.
Without structured pay progression and competitive salaries, retaining a skilled workforce will become increasingly difficult, ultimately impacting the quality of care provided.
The Need for Government Action
Aamevol Home Care joins the call for the UK government to commit to an adequate funding solution. The government must recognise the essential role of social care providers and implement financial measures that will:
Ensure sustainable wage increases without placing excessive financial pressure on providers.
Support care providers in retaining and developing their workforce.
Address the rising operational costs within the sector.
At Aamevol Home Care, we remain committed to delivering high-quality care services while advocating for fair wages, workforce stability, and long-term financial support for the social care sector.
For more updates on the challenges facing the care sector and how we are addressing them, visit our blog regularly. Together, we can push for positive change in social care.