Care sector Spring Statement disappointment as operating costs are predicted to increase by £158,000 annually

New insights into the financial pressures facing the care sector are causing concern for both care seekers and care sector leaders. With care operators unable to qualify for exemptions from increased employer costs, such as increased national insurance contributions, combined with cuts in public sector spending, many care providers are struggling to operate efficiently.

Data from Online Care Finder Lottie has revealed that the predicted increased costs for running a care home from 1 April 2025 will average £158,323.96 a year due to rising employer contributions (including increased national insurance contributions and living wage increases). With costs rising, many care operators are having to make tough decisions. Last year, one in seven care providers reduced the level of service they offer.

Similarly, in 2024, one in three care providers were already operating with a loss. This means that despite the high demand for care, many providers are struggling to keep their business afloat or offer the same level of service as in previous years. The increased employer contributions are expected to tip the care sector's funding crisis further, and without a lifeline from the government, the situation will make it more difficult for care seekers to access affordable care.

Previous research from Lottie has found that 65% of people looking for elderly care are struggling to afford increasing care costs and access the services they need. With many care homes reducing the level of services provided or raising their prices, families are left with limited options.

Online Care Finder Lottie is urging the government to step in before the care sector passes a crisis point.

“The financial burden on care providers is becoming unbearable,” shares Will Donnelly, Co-Founder and CEO at Online Care Finder Lottie.

“Without immediate support, more care operators will have no choice but to cut back their services, and more families will struggle to access affordable care. The government urgently needs to offer support and rethink their exemption rules on increased employer contributions across the UK’s most vulnerable sectors.

"With an ageing population, the care sector is at a crossroads. For too long, the concerns raised by the social care sector have been overlooked. Now more than ever, decision-makers must listen and provide financial support to keep services running to ensure older generations and those more vulnerable are able to access the care they need”, concludes Donnelly.