Impact of Autumn Budget on Social Care
The narrative around adult social care funding for this Budget began unfolding almost immediately after the new government took office. In the Chancellor's public spending audit this past July, a significant policy shift occurred: planned adult social care charging reforms—which would have required £1.1 billion by 2025/26—were officially cancelled.
In the subsequent Autumn Budget of 2024, the Chancellor aimed to offset this cancellation by announcing an additional £600 million in grant funding for social care in 2025/26, benefiting both adult and children’s social care services. An increase of £86 million to the Disabled Facilities Grant, which enables essential home modifications to support independent living, was also introduced. Together, these measures contributed to an estimated 3.2% increase in local government spending power, an investment which, while helpful, will likely be stretched thinly.
However, this new funding will face significant constraints. The adult social care sector, a workforce comparable in size to the NHS but operating outside the formal public sector, will be particularly vulnerable to cost pressures. Rising expenses tied to the increased National Living Wage and the higher National Insurance Employer Contributions will weigh heavily on the sector, amplifying financial challenges in the months to come.
While adult social care was not wholly overlooked in this Budget, the lack of substantial, transformative reforms leaves the sector facing a challenging future. The promised fundamental changes to social care are still absent from the immediate policy agenda, keeping much-needed reforms on the distant horizon and leaving a chilly atmosphere for those working within this critical sector.
Headline announcements
Real-terms increase in core local government spending power of around 3.2%, including £600 million of new grant funding to support social care (for both adults and children’s services) and a £86 million increase to the Disabled Facilities Grant
Total health spending increases by 3.8% a year on average in real terms between 2023/24 and 2025/26. This includes a 3.4% increase to day-to-day (resource) spending on items like staff salaries and medicines, and a 10.9% increase in capital investment on items like buildings and equipment over this period
Disincentivising activities that cause ill health by renewing and increasing duties on tobacco-related products and the Soft Drinks Levy
Increases to the National Living Wage and National Insurance Employer Contribution costs, which will particularly affect non-public sector employers