The financial strain on English councils is becoming impossible to ignore. The latest edition of The King’s Fund’s annual Social Care 360 report shows a system under growing pressure, with local authorities spending more, supporting more people, and increasingly relying on measures that cannot be sustained indefinitely.
What once looked like careful financial management is now giving way to something far more precarious: councils dipping into reserves and taking on more debt simply to keep adult social care services running.
At the centre of the problem is the combined effect of rising costs and rising demand. The King’s Fund found that fees paid by councils for residential care for working-age adults rose by 3.6 per cent in real terms, or £1,823 a week in 2024/25.
For older people’s residential care, fees rose by 3.3 per cent to £1,019 a week. Homecare costs also increased, reaching £23.56 an hour.
Taken across the whole system, adult social care spending climbed to £34.5 billion, or 4.1 per cent. The King’s Fund says that these figures underline the reality facing town halls across England. Even where spending rises, it is being completely absorbed by inflationary pressures and the basic cost of maintaining care provision.
The report also highlights a rise in demand for adult social care is also rising. It says 30,000 more people received publicly funded long-term care in 2024/25 than the year before, taking the total to 889,000, a 3 per cent increase. That rise reflects both a growing older population and continued demand from working-age adults with disabilities and complex needs.
For councils, this is not optional spending that can be deferred or trimmed back at will. Adult social care is a statutory responsibility, which means mounting needs have to be met, even when the wider finances of local government are under acute pressure.
That is why the wider financial warning signs matter so much. According to the Chartered Institute of Public Finance and Accounting (CIPFA), English councils’ external debt rose by 10 per cent last year, while usable reserves fell by 4 per cent.
Those reserves were never intended to plug recurring gaps in day-to-day spending. They are supposed to provide “resilience” against shocks and support long-term stability. Using them to sustain basic care provision may buy time, but it leaves councils more dangerously exposed in the years ahead and narrows their room for manoeuvre across the rest of local government.
It also means that adult social care is consuming an ever-larger share of council budgets, with visible knock-on effects on other discretionary services such as culture, libraries and leisure. When councils prioritise care, as the law requires them to, spending elsewhere is squeezed.
Simon Bottery, Senior Fellow at The King’s Fund and author of the report, said: “‘Local authorities have gone to great lengths over the past year to fulfil their statutory obligations. They have spent more money on social care, with that investment not just going towards the increase in provider fees but also expanding the number of people receiving care.
“This will have improved the quality of life for the thousands of additional people now in receipt of care and given the challenging financial backdrop should be welcomed. However, it has come at great cost to local authority budgets and ultimately is not sustainable.
“We are long overdue a national conversation about how to properly reform social care so that it provides the support people need is organised and is funded in a way that does not put at risk other local authority services and their overall financial health.”
The urgent question now is whether ministers are prepared to move beyond temporary fixes. The King’s Fund report again makes clear that social care remains precarious, despite increased spending. What councils need is not another short-term patch, but a durable settlement that matches long-term obligations with long-term funding. Any serious reform will have to address how care is paid for, how costs are shared, and how councils can plan beyond annual crises – But this is an issue that has been ignored and sidestepped by multiple governments in recent year, wary of either radically changing what the state should provide and rationing services, or dramatically increasing funding. Without either of these reforms, it looks likely that adult social care will continue to limp on, reacting to changes and never able to get ahead of the growing demand.
A crisis in the making: Why Councils are raiding reserves to save Adult Social Care
