Adult social care funding in England

In 2023/24, local authorities in England spent £23.3 billion on adult social care (net current expenditure). This represents the biggest area of council spending after education.

Funding pressures

Several factors contribute to funding pressures on adult social care, including:

• Local government finances: the National Audit Office has highlighted that “local authority finances are under significant pressure” and “this pressure impacts on the funding available for adult social care.”
• Demographic pressures: the number of older people (the group most likely to need social care) is rising faster than the population as a whole. There is also increased demand for care from working age adults. The Health Foundation has estimated an additional £8.3 billion will be required by 2032/33 just for adult social care to keep up with growing demand.
• Increases in the National Living Wage: the Nuffield Trust has estimated that the 6.7% increase to the NLW in 2025/26 will cost the adult social care sector around £1.85 billion.
• Increasing costs of care: rising costs due to increased complexity of needs has been ranked as the biggest area of concern in terms of financial pressures by directors of adult social services.

In addition, at the Autumn Budget 2024, the government announced changes to employer National Insurance contributions (NICs) from April 2025, including an increase in the employer NICs rate from 13.8% to 15%. The Nuffield Trust has estimated this will cost independent social care employers around £940 million in 2025/26, although there is some uncertainty around this estimate.

Additional funding for 2025/26

There is no national government budget for adult social care in England; most publicly funded social care is financed through local government revenue. Over recent years, the local government finance settlement has included an increasing amount of ring-fenced funding for adult social care.

Significant additional funding was made available for adult social care in 2023/24 and 2024/25, a substantial part of which came from redirecting funding originally intended for social care reform to support current provision.

The local government finance settlement 2025/26 confirmed the following funding for adult social care:

• an additional £880 million for the Social Care Grant (for adult and children’s social care). The grant will be worth around £5.9 billion in 2025/26
• local authorities with social care responsibilities will be able to set an adult social care precept of up to 2%. The government said this would make available around £650 million.
• a £2.64 billion Better Care Grant, which will be pooled as part of the Better Care Fund. This grant was made by combining two grants from 2024/25: the £2.14 billion improved Better Care Fund and the £500 million Discharge Fund
• £1.05 billion for the Market Sustainability and Improvement Fund

The settlement also includes £515 million of funding for councils to support with the costs associated with the increase in employer NICs across all service areas.

While stakeholders welcomed the additional funding announced for adult social care in 2025/26, concerns were raised that it would be absorbed by the increases in the National Living Wage and increases to employer NICs. The Association of Directors of Adult Social Services has suggested there “remains a funding gap of over £1bn for adult social care to even stand still next year.”

The King’s Fund stated that successive governments had failed to fully fund increases in the National Living Wage and this had ultimately led to “fewer people accessing publicly funded long-term care as local authorities try to balance their books”. It said this trend was broken in 2023/24 due to “a significant increase in local authority spending power”, but warned it could return unless the government fully reimburses additional costs faced by providers.

The government has said it “considered the cost pressures facing adult social care” as part its wider consideration of local government spending.