Adult Social Care Sector Might be Shrinking Rapidly

Topics covered: adult social care, cost of living crisis, social care funding

Care England’s report launched on 16 March 2023 revealed that one third of adult social care providers have considered leaving the market in the last year.

It is well known that the sector has been struggling amidst the aftermath of the COVID-19 pandemic and cost of living crisis on top of the unprecedented inflation rates we are currently experiencing. Coupled with the staffing crisis, which has seen a record number of vacancies in the sector, it is no surprise that so many providers have considered getting out before they are forced out.

The financial viability of many of these businesses is at stake. For some providers utility bills have risen by as much as 500% and increasing workforce pay, which has not be supported by any form of external funding, has resulted in deficits or surplus decreases for 82% of providers. These pressures have forced 42% of providers to close part of their businesses or hand back contracts to local authorities.

It seems that a main driving force for these cost pressures comes down to the workforce crisis. 92% of providers have cited pay as a significant pressure on their businesses and 85% stated that local authority fee increases were not keeping up with increases in staff pay. 95% of providers have reported that increasing pay would have the most positive impact on boosting the staff numbers.

This data comes against the backdrop of the government allegedly reneging on their promise to inject £500 million into social care workforce development.

So what does this mean for the sector as a whole? It would seem that the smaller providers may be forced out due to costs and the ones that survive will have no choice but to increase fees in order to maintain financial viability for their businesses. In turn, this may cut off a crucial resource for some of the most vulnerable in society.

It will be imperative for providers to urge the government to act and pay close attention to budget and policy announcements in the weeks to come so that they can pre-empt any further financial hits and take swift mitigation action where necessary.

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