What the Spring Statement Means for Social Care Business Owners

Yesterday's Spring Statement from Chancellor Rachel Reeves brings significant changes that will impact social care business owners, including care homes and domiciliary care providers. With rising costs, workforce challenges, and funding pressures already affecting the sector, including hikes in national insurance, the latest announcements require careful consideration.

National Living Wage Increase

• One of the biggest immediate impacts on social care businesses is the increase in the National Living Wage from £11.44 to £12.21 per hour.

Impact on Social Care Businesses

✔️Higher wages for care workers will help retain staff in a sector struggling with recruitment.

❌Increased payroll costs will put pressure on businesses, especially those reliant on local authority funding, which may not rise in line with wage increases.

❌Potential need to raise care fees for private-paying clients to offset higher costs.

👉Action: Social care providers should review budgets, talk to us about funding options, and consider cost-saving measures such as better staff scheduling or efficiency improvements.

Changes to Benefits & Workforce Support

The government is reforming welfare payments to reduce economic inactivity and encourage more people back into work. This includes:

• £1bn investment in employment support to help people find jobs.
• Stricter rules on Personal Independence Payments (PIP) and Universal Credit, potentially affecting both care workers and service users.

Impact on Social Care Businesses

✔️Larger workforce pool – The push to get more people into work may help ease care sector staff shortages.

❌Concerns for vulnerable clients – Some care recipients may lose benefits, making it harder for them to afford necessary care services.

👉Action: Care providers should explore our recruitment schemes and government incentives to attract new staff while also monitoring the impact on service users who rely on benefits.

Funding & Taxation: No Immediate Relief for Care Providers

The Spring Statement focused heavily on cutting the budget deficit, meaning no new funding support for social care businesses.

• The tax burden remains high, with no immediate reductions in business rates or employer costs.
• A crackdown on tax avoidance aims to raise £1bn extra for the Treasury, but social care businesses will see no direct financial relief.
• The economic growth forecast has been downgraded, suggesting ongoing financial pressures.

Impact on Social Care Businesses

❌ No new funding for care providers, meaning businesses must continue operating under tight financial constraints.

❌ Inflation pressures remain, making utilities, food, and equipment more expensive for care homes.

👉 Action: Care providers should continue advocating for better sector funding while ensuring their business remains financially resilient. Reviewing contracts, negotiating supplier prices, and exploring energy-saving initiatives could help reduce costs.

What Should Social Care Providers Do Next?

• ‍Budget carefully – Factor in wage increases and inflationary pressures and take advantage of our 6 months interest free payments for insurance help.‍
• Review recruitment strategies – Make use of our recruitment team including a free recruitment process audit.‍
• Engage with local authorities & industry bodies – Push for fair funding in light of increased wage costs.‍
• Support clients affected by benefit changes – Be prepared for discussions with families who may struggle to afford care.
• Reduce Energy costs - sign up to our Energy Tracking Service.
• Reduce Expenditure - Find out more about our cost saving solutions.

The Spring Statement highlights that cost pressures on social care businesses are likely to persist, making strategic planning, advocacy, and financial resilience more important than ever.

Don't hesitate, talk to us today about our cost saving solutions developed specifically to help care businesses through this period of needing to cut costs and improve efficiency, without affecting the quality of care delivery.

We are here to help, you can find out more about our cost saving solutions and contact us to help you through this, as your partner in care business.