Care provider fees have risen by about 5% this year, but leaders warn the increases are being outstripped by wage and tax hikes and other cost pressures.
Provisional figures on the average fees paid by councils to external providers in 2025-26, released by the Department of Health and Social Care (DHSC) last week. showed increases of:
- 5.3% for home care (to £25.05 per hour);
- 5.3% for care homes without nursing for older people (to £956 per week);
- 4.9% for nursing homes for older people (to £1,089 per week);
- 5% for care homes without nursing for working-age adults; (to £1,835 per week);
- 6.0% for nursing homes for working-age adults (to £1,486 per week);
- 5.6% for supported living (to £22.95 per hour).
National insurance and living wage hikes
The data covers the period that starts with the significant increases to the national living wage (NLW) and employers' national insurance contributions (NICs) in April this year, when:- The NLW rose by 6.7%, from £11.44 to £12.21 per hour;
- The rate of employers' NICs rose from 13.8% to 15% and the salary at which it starts being paid fell from £9,100 to £5,o00.
The Association of Directors of Adult Social Services (ADASS) has calculated that the two measures, combined with inflation, are costing councils an extra £1.7bn this year, with a further £700m in pressures arising from demographic changes, making a total of £2.4bn.
However, according to ADASS, dedicated funding for council adult social care services - from government grant and money raised through the adult social care precept, a part of council tax - has risen by only £1.2bn in 2025-26, leaving a shortfall of a similar amount.
'Significant fee rises not enough to meet cost increases'
“While a 5% increase in fees to care providers is significant, we know in most cases that won’t meet funding pressures from the national living wage increase and national insurance changes," said ADASS chief executive officer Sally Burlington. "This is the result of a funding gap of over £1bn for adult social care to even stand still."“This means many older or disabled people and those caring for a family member won’t get the support they need, social care staff aren’t being paid fair wages and care providers are leaving the market.
For provider representative body Care England, chief executive Martin Green issued a similar message.
“The average fee increases for social care do not compensate for the extra cost that has been levied on the sector by the government, such as the higher levels of employers' national insurance contributions, increases in the minimum wage, and the underlying rate of inflation for all goods and services, which is continuing to climb," he said.
The Homecare Association said the DHSC's figures for fee rate increases were similar to data it released in June, which found that council fees had increased by 5.6% on average, against estimated increases of 10% in domiciliary care providers' costs.
Home care fees 'well short of minimum required'
The department's figure for average home care fees (£25.05 per hour) is somewhat higher than that calculated by the association for councils in England (£24.10).But both are well short of the association's calculation of the minimum fee required to pay care workers the NLW, resource management and supervisor salaries, meet other costs, such as recruitment, training, rent, utilities, legal fees and overheads, and enable providers to make a profit of 7%. It has calculated this as £32.14 an hour for 2025-26.
Homecare Association chief executive Jane Townson said: "If the government wants to improve employment conditions and prioritise prevention and community-based care, immediate action is essential. They must introduce a national contract for care, which mandates a minimum price for home care. This approach guarantees fair wages for care workers, ensures provider sustainability and delivers the quality support people deserve.”
Sector warnings over future adult social care funding
The DHSC figures come with sector leaders warning that government funding allocated to adult social care for 2026-29 was little more than what was required to meet rising costs.In its spending review, released in June, the government said that funding for adult social care would be £4bn a year more in 2028-29, compared with 2025-26. Think-tank the Health Foundation has assessed that £3.4bn extra was needed, at a minimum, by 2028-29 to cover rising costs and increased demand.
This means little resource will be left over to fund initiatives such as the government's planned fair pay agreement for adult social care, under which a negotiating body will be established to set terms and conditions for the sector, with a view to raising pay and attracting more staff.
