The Social Care 360 analysis by The King's Fund shows the increasing cost of paying staff following introduction of the National Living Wage in 2016 has led to a fall in the number of people receiving publicly funded long-term care.
Simon Bottery, senior fellow at The King's Fund and lead report author, said: ‘The increase in the Minimum Wage has been richly deserved by care workers but hasn't been fully funded by Government. As a result, we have seen a ‘doom loop' in which social care providers have sought large fee increases from local authorities, which in turn have had to cut the number of people they support to make ends meet.'
The report shows care worker pay increased by 17% in real terms due to the National Minimum Wage between 2015/16 and 2023/24.
At the same time fees paid by local authorities rose by 33% for older people's care homes, 13% for working age adult care homes and 18% for homecare.
During the same period the number of people with supported with long-term care by local authorities fell from 873,000 to 859,000.
The report warns the hike in National Insurance Contributions and the Government's Fair Pay Agreement for social care workers will significantly add to providers' costs.
Cllr David Fothergill, chairman of the Local Government Association's Community Wellbeing Board, said: ‘As this report highlights, local authorities – and their care provider partners – are under unprecedented financial pressure, exacerbated by inflation, rising demand, an increase in employer National Insurance Contributions and workforce challenges.
‘The Spending Review must urgently address a long-term funding plan for adult social care. Without immediate Government action, care services will remain at risk, with devastating consequences for individuals and families who rely on them.'
Liberal Democrat health and social care spokesperson Helen Morgan MP said: ‘The time for delay is over. It is now time for action. That means completing the social care review within a year and Rachel Reeves scrapping her foolish jobs tax for care providers.'
Rory Deighton, acute director at the NHS Confederation, said: ‘Social care provides vital support to hundreds of thousands of people across the country, so it is worrying to see this analysis suggesting that rising pay costs is leading to fewer people receiving support.
Isabel Lawicka, director of policy and strategy, NHS Providers, said: ‘The social care can cannot be kicked down the road any longer. Successive Governments have dodged difficult decisions on social care reform with huge knock-on effects for the NHS.
‘NHS trust leaders hope that the new independent social care commission will quickly get to grips with the deep-rooted challenges faced by social care services with measures to support people to keep well and independent at or close to home.'
