Autumn Budget 2024: What does it mean for the care industry?

The Labour government have recently revealed their first budget in 14 years, and while there is some cause for optimism around the prospects of long-term reform with the idea of a National Care Service, in the short term there is concern that despite a cash injection, the problems facing the industry will persist and maybe even worsen. 

What does this mean for the care sector? 

While it will be welcome news for the care sector to be getting a cash injection of £600 million, or at least part of it shared with children’s care services, not to mention an £86 million increase to the Disabled Facilities Grant, which helps to support people to modify their homes so they can continue to live there for longer and more independently, the fact remains that this amount of money will be spread quite thinly and will probably be absorbed into the running of the care sector, given the fact that recently it was reported that 81% of councils are set to overspend on their social care budgets.  

The support comes as part of a 3.2% increase in local government spending power, but the amount of money set aside for the care sector in the budget is dwarfed by the amount of money set aside for the NHS, despite the fact that the care sector employs at least as many people as the NHS does and contributes between £50-60 billion to the English economy every year. In contrast to the £600 million, the NHS will receive an additional £22.6 billion of resource spending for the day-to-day health budget for this year and next year.  

Moreover, while the increase in National Living Wage might sound like a promising policy in theory, the reality is that this might put even more pressure on an already creaking social care sector which is struggling to meet the expectations of staff at present, as well as covering ever-increasing costs. 

The impact on staffing 

We may well end up in a situation where the increase in the National Living Wage means that care homes won’t be able to meet the minimum salary expectations of the incoming staff which are desperately needed. This issue is mirrored in the increase in National Insurance payments, which in turn will increase the employer contribution costs. 

Needless to say, the autumn budget has been met by some in the care sector with cautious optimism, some with apathy and by others with a sense of familiar disappointment, especially when it comes to the dimension of staff retention.  

Writing in the Guardian Letters section, Rachel Dodgson, CEO of Dimensions, said: “The budget is alarming for not-for-profit social care providers because it will put us under pressure to meet the increases in tax costs across our workforce.  

“Our initial analysis indicates that the changes to national insurance will cost us £5m next year. In addition to this, the increase in the national living wage will increase our wage bill by £10.2m and give us less scope to maintain differentials between entry-level and more experienced colleagues, which is vital to retain them.” 

Additionally, CEO of Care England Martin Green spoke to Care Management Matters and said: “Today’s Budget is a glaring missed opportunity by a government full of promises to make a real difference to adult social care and establish a sustainable funding framework that meets the gravity of our current crisis. 

“The Government’s £600m commitment to be shared between adult social care and children’s services is, unfortunately, a drop in the ocean compared to the staggering £2.4b in rising costs associated with wage increases and employer national insurance contributions. […] It’s disheartening that social care once again receives only a fraction of the support it needs, despite its critical role in easing NHS pressures. 

“The reality is that without serious investment in adult social care, the government is choosing short-term savings over long-term stability. We needed a bold step forward, a signal that adult social care matters to the fabric of our society.” 

Not enough to plug the gap 

This news of additional funding may be a step in the right direction, but in the short term it will do little, if anything, to mediate the issues currently faced by the care industry. As mentioned above, one of the ways in which this will be most acutely affected is with the workforce.  

The picture is already less than promising; the most recent State of the Social Care Sector and Workforce in England report, conducted by Skill’s for Care, found that many of the more positive movements, such as vacancies falling to 131,000 on any given day, general workforce growth and a reduction in the rate of turnover in independent and local authority employers for the first time in nearly ten years, has been largely driven by record levels of international recruitment in 2023/24.  

The sector is still struggling to recruit and retain domestic care staff, with the number of people working in care roles in the independent sector with a British nationality falling by 30,000. Even taking into account the much-needed role being played by international care staff in recruitment, the numbers of vacancies remain untenably high, sitting at around 8% - three times that of the wider economy. Given the fact that international recruitment also seems to be falling, this number could well grow in the future. 

What can the care industry do? 

With fundamental reform a long way on the horizon, the care industry is calling on the government to do more in the short term to help ease issues like staff retention and recruitment now. But for the next few years at least, what additional funding there is may not even be enough to keep the care industry where it currently is.  

In the short to medium term, the best avenue for the care industry might well be to look inwards and embrace digital technologies that improve safe staffing levels, work-life balance and the management of fees and staff resources like staff dependency tools or products that increase staff knowledge and experience like mandatory and compliance training, among other digital solutions to help to maximise the existing resources available to care organisations. 

But thinking more long-term, the sentiment shared by those within the industry seems to be that this budget is a step in the right direction, but much more is needed if the care sector is to be reformed and reimagined to serve the most vulnerable members of our society. 

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