What does the budget mean for social care

Chancellor Rt Hon Rachel Reeves delivered her first budget today and it has people talking! I am not a financial expert, nor someone who understands the budget, so I have utilised various resources to pull together this guide, to help you (and me) understand how the budget could and will impact social care

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Today's Budget Headlines

Here are the key points that will impact social care:

1. Local government will receive funding worth "at least" ￡600m for social care.
2. National insurance (NI) contributions for employers (not employees) will increase by 1.2 percentage points to 15% from April 2025.
3. The minimum wage will rise by 6.7%
4. The London Living Wage will rise to ￡13.85
5. Changes to how people can claim carers allowance
6. Businesses to pay more National Insurance Contributions
7. The day-to-day NHS budget will increase by ￡22.6bn
8. The NHS will receive a ￡3.1bn investment in its capital budget for facilities and equipment.

Impact on social care

Looking at the four key points from the budget above, including some of the other announcements, here is how social care will be impacted:

• The NHS has been handed a huge ￡22.6bn boost in the daily budget, with ￡3.1b but only a mere ￡600m for social care. This funding will address a number of issues, including more beds, repairs for buildings and more hubs, which I hope does see the reduction of waiting lists, but I do believe that with the increasing needs of our ageing population, that without the proper funding needed for social care, people will still be stuck in the hospital system, waiting for care.
• The increase in national insurance contributions (1.2% increase to 15% from April 2025) for employers, combined with employers now having to start paying NI from ￡5,000 a year (previously ￡9,100) will impact many care providers, as the cost of employment is a significant part of their expenses. Most local authorities do not pay near the amount needed for providers to pass this onto their staff
• With a sector built on the back of low paid staff, the minimum wage increase of 6.7% to ￡12.2 an hour for people aged 21 and over, and by 16.3% to ￡10 an hour for those aged 18 to 20, this will put providers out of business, unless there is increase from local authorities in the amount they pay per hour for care

Is there any positive impact?

There are a couple of announcements that are positive, and these are:

1. The backbone of social care, the unpaid carers will now be able to claim carer’s allowance while earning more than ￡10,000 a year, which will provide additional financial support to carers but also mean that those who want to work will be able to, whilst getting to keep this income.
2. There will be many companies that are not able to stay open with these announcements, which could see people out of work and looking for a new job. Whilst having people losing their jobs is not a positive, this does mean that some will come into the social care sector, bringing with them new skills, fresh ideas and allowing the sector to grow and meet the needs of the ageing population.

What can providers do to prepare?

Many care providers survive month to month, and it is a fact that some will not survive these changes to business. To prepare for the changes announced in the 2024 budget, care providers can take several proactive steps:

1. Review and adjust your budgets to account for the increased costs (new minimum wage and higher national insurance contributions). Whilst doing this, try to identify areas where cost can be reduced.
2. Review how much you need to charge people you are supporting
3. If you are supporting adults funded by the local authority/CCG, reach out with your new hourly rate, and seek funding.
4. Review all supplier contracts that are due to come up for renewal or are out of date. Shop around and get a cheaper deal
5. Re-evaluation your staffing levels and consider strategies to retain and attract employees to prevent further costs of employment.
6. Begin to look at how you can implement more efficient practices to offset increased costs such as investing in technology to automate tasks or streamline operations, look at digital solutions for rostering to reduce travel costs etc.
7. Consider how you could diversify your business to bring in extra income or reduce costs.
8. Incorporate sustainable practices to reduce costs and environmental impact
9. Seek financial support from your bank and/or insurance company
10. Remember to take care of your mental health - this is going to be a challenging time

The lack of social care funding and insight into the role that social care plays, both in society and on the NHS has been overlooked yet again. We still have no plan for how The Labour Party will fix the NHS and without this, the additional funding that is being given to the NHS will be swallowed up and I wonder whether we will really see any improvements.

Our frontline staff will benefit from the pay increases, which I fully support, but I worry that this leaves less money in the budget to ensure that other staff also receive pay increases such as back office roles, Registered Managers etc.

I can't help but feel for the providers and high street stores that already operate on tight budgets and live month to month as this will be their demise. It's heart-breaking to think of the impact to the people that these providers are currently supporting that will be left without care, the impact job loses will have on people's mental health and that in 2024 this is the position we find ourselves living with.

Times will be tough, there is still no real plan for social care from government, but remember to look out for one another and we will have to await the next chapter...