Charging people for care generating more and more income for councils

Councils significantly raised their income from charging people for care last year, government data has revealed.

English authorities raised £4.7bn in client contributions in 2024-25, up 14% on the £4.1bn raised in 2023-24, according to the annual adult social care finance report, published by the Department of Health and Social Care.

This was a faster rate of growth than the 9% rise in councils' gross expenditure on adult social care, which increased from £27.1bn to £29.4bn across the two years. Increased income from client contributions accounted for a quarter of the rise in spending.

And according to the Association of Directors of Adult Social Services (ADASS), the 14% rise followed an 18% increase in income from client contributions in 2023-24.

Increase in numbers receiving care

The growth in income from client contributions in part reflects the increase in the number of people receiving care year on year.

In 2024-25, 888,820 people received long-term care from their council, up from 858,720 in 2023-24, according to the DHSC's separately published report on adult social care activity.

As of 31 March 2025, 672,295 people were receiving long-term care, compared with 650,085 12 months previously.

However, some councils also changed their policies in 2024-25 to increase the amount of income they received from care charges.

Regional variations in income increases from charges

The DHSC's data showed regional variations in the increase in income from client contributions from 2023-24 to 2024-25.

The amount raised increased by 17.4% in the North West, from £634m to £744m, by 16.8% in the North West (from £451m to £527m) and by 15.3% in London (from £452m to £521m), all above the national average of 14%.

By contrast, the increase in the North East was only 6.9% (from £272m to £291m), while it was also below average in the East Midlands, South East, South West and Yorkshire and the Humber.

Differences in income raised by age

Though adults aged 65 and over accounted for 59% of long-term care recipients as of 31 March 2025 (396,000), councils spent roughly the same amount on their long-term care (£12bn) as they did on equivalent services for those aged 18-64 (£11.5bn).

However, despite spending per head by councils being higher for working-age adults, 80% of income from client contributions for long-term care (£3.6bn) came from older people.

This likely reflects differences in patterns of care and average income levels between the two groups.

'Councils in an invidious position' - ADASS

In response to the figures, the Association of Directors of Adult Social Services (ADASS) said: "Councils are in an invidious position, whereby they have insufficient funding to fully meet the needs of those people who draw on care and support but only have limited ways to raise income to fund close budgetary gaps and raise income through the social care precept and by increasing charges to people that access services."

The association said that, consequently, the Independent Commission into Adult Social Care, which has been tasked by government with developing long-term reforms to the sector, "incites a national conversation about the level of support we can expect from the state, as well as the balance of funding between state and the individual."

"It is important to note that the increase in client contributions of 13.8% in 2024-25 was lower than the 18% growth in 2023-24," it added.

Growth in numbers receiving care following years of decline

Last year was the third consecutive year in which the number of people receiving long-term care increased, with the number supported in 2024-25 (888,820) topping the previous high of 872,520 seen in 2015-16.

That was followed by years of decline, to a low of 817,995 in 2021-22.

ADASS added: "Such increases are likely driven by increasing levels of need, councils’ efforts to reduce adult social care waiting lists for assessments, reduced numbers of people qualifying for NHS-funded continuing healthcare and increasing number of self-funding residents depleting their assets and becoming eligible for council funded care.

"However, it should be noted from the ADASS spring survey and CQC assessment reports that there are hundreds of thousands of people waiting for care and support because of the funding and workforce challenges facing the sector, which in turn means that people have significant unmet and under met needs at the detriment to their health and wellbeing."

Increase in funding levels but concerns persist

The recovery has been aided by year on year increases in spending, enabled by boosts to government grant and significant hikes in council tax across the country.

The latest 9% rise in expenditure, in 2024-25, amounted to a 4% increase in real-terms.

However, despite the upward trends in expenditure and the number of people receiving care, significant concerns about the level of funding for the sector - and services' ability to meet need - persist.

In April 2025, the 6.7% rise in the national living wage (NLW) and increases in employer national insurance contributions (NICs) added an estimated £2.8bn to providers' cost base, £2bn of which should have been covered by councils, according to think tank the Nuffield Trust.

However, despite authorities facing other pressures - including from growing numbers of people with care and support needs and inflation more broadly - they have only budgeted to increase net expenditure by £2.2bn in 2025-26 compared with 2024-25, according to government data.

Claims of unmet need and underfunding

At the same time, sector bodies have claimed that existing levels of provision leave much eligible need unmet or undermet and services underfunded relative to the costs of care.

For example, the Homecare Association has calculated that there is a £1.6bn gap between council fee levels for domiciliary care providers in England this year and the amount required for services to cover their costs and turn a sustainable level of profit (7%).

There are also concerns about the future trajectory of sector funding. While the government has said that councils will have more than £4bn more in 2028-29 to spend on adult social care than in 2025-26, this is reliant on authorities raising council tax by 5% a year and may necessitate a squeeze on other services.

Increased costs from fair pay agreement

Think tank the Healthcare Foundation has calculated that councils will need a "bare minimum" of £3.4bn more in 2028-29 than in 2025-26 just to deal with increased demand and rising costs.

However, they are facing increasing costs beyond this, notably from the implementation of the sector's first "fair pay agreement" in 2028-29. Under this, a new Adult Social Care Negotiating Body, comprising employer and union representatives, will set terms and conditions for sector staff.

The government has allocated £500m to fund the agreement in 2028-29; however, this will come from the spending review settlement, reducing funding to meet other pressures, and has been widely criticised by sector bodies as inadequate.