Octobers Budget, presented by Chancellor Rachel Reeves, brings a range of financial announcements, but disappointingly little was offered to support the social care sector specifically, beyond the previously agreed £600 million – an amount many feel is insufficient to address the needs of the sector.
Summary of Budget Announcements
Key announcements in the Budget that will affect social care and related sectors include:
- An additional £22.6 billion for ‘day-to-day’ healthcare spending
- Increased National Insurance contributions from employers
- Confirmation of national minimum wage rates
- A substantial increase in local government funding for next year
- An update planned for the health and disabilities system
- Increase in the bus fare cap to £3
- Growth in state pension spending, set to rise to 4.1% in 2025-26
- Appointment of a Covid corruption commissioner
- Expansion of the Affordable Homes Programme to £3.1 billion
Funding Gaps Persist in Social Care
While the additional £22.6 billion in funding for the NHS and increased support for local governments in 2025 are positive steps, there is a growing sense that government funding remains inadequate to meet the demands of the social care system. Recent reports, debates, and analyses – including those from the House of Lords, government, and respected institutions like the Institute for Fiscal Studies (IFS) – continue to highlight the urgent need for reform and sustained investment in social care.
Notably, a recent independent report by Lord Darzi concluded that the social care system is ‘far from supporting the scale of need’ it faces. Additionally, last week’s analysis from the IFS pointed to unresolved issues in social care funding, an observation echoed in a recent House of Lords debate.
Detailed Breakdown of New Budget Announcements
Some specific commitments from the Chancellor’s speech include:
- NHS Funding: New funding for the NHS is part of a 10-year plan for health system improvements, to be detailed further in the spring.
- Welfare System: Changes to the health and disabilities welfare system were announced, with a focus on addressing welfare fraud.
- Tax Changes: Employer National Insurance contributions will rise from 13.8% to 15%. However, the Employment Allowance will increase from £5,000 to £10,500, exempting around 865,000 employers from paying NI contributions next year.
- Personal Income Tax and NI Thresholds: Personal tax thresholds will be adjusted in line with inflation by 2028-29.
- Fuel Duty: The 5p cut in fuel duty on petrol and diesel will remain for another year.
- Affordable Housing: The government will increase the Affordable Homes Programme to £3.1 billion.
The Budget brings some support for local government and NHS funding, but for the social care sector, funding gaps persist. As calls for meaningful reform grow louder, many will be watching for additional commitments that better address the urgent needs of social care.
