By Lucy Humphrey, Chief Executive, Leading Lives

This week’s Budget has brought the funding challenge facing adult social care into even sharper focus.

From 1 April 2027, the National Living Wage will rise by 3.9% to £13.21 an hour. Around 2.3 million workers are expected to benefit. That is something we should welcome. People doing vital work should be fairly rewarded.

For adult social care, however, there is a question that cannot be separated from that decision:

How will the organisations employing and supporting those workers be funded to meet the increased cost?

For organisations delivering publicly commissioned care, this matters enormously. We cannot simply pass increasing employment costs on to customers in the way many commercial businesses can. Much of our income is determined by the fees commissioners pay for services.

At Leading Lives, 84.37% of our income is spent on salaries.

So increases in nationally determined employment costs have an immediate and significant effect.

And the challenge is not simply about ensuring that the lowest paid colleagues remain above a statutory minimum. Responsible employers must also think about pay differentials for people taking on greater skills, experience, leadership and responsibility. If those differentials continually narrow, we risk making progression and additional responsibility less attractive.

A Budget that raises an important question for social care

The Government has set out an ambitious longer-term direction for care.

The Budget commits to using savings from changes to the State Pension Triple Lock to help build a high-quality, preventative National Care Service in England, providing older people with personal care free at the point of use. Baroness Casey’s Independent Commission on Adult Social Care will now report in 2027.

That could represent a profound change for adult social care.

But sector reform tomorrow cannot come at the expense of the sustainability of the care system today.

The Budget provides a further £190 million for the NHS in England in 2026/27 to help manage winter pressures. What is much less evident is how the increased workforce costs facing adult social care providers from April will be reflected in the income those providers actually receive.

That brings us back to a longstanding problem.

The missing link in the funding conversation

There is rarely a shortage of debate about how much money government invests in adult social care.

But national funding announcements are only one part of the story.

Central government provides resources to local authorities. Local authorities have the extremely difficult task of balancing competing demands and setting budgets. Commissioners then determine the fees paid to organisations providing care and support.

Each part of that system faces genuine financial pressure.

For providers, however, financial sustainability is ultimately determined by whether commissioned income keeps pace with the real cost of delivering safe, high-quality care.

Our recent experience in Suffolk demonstrates the challenge. The overall blended adult social care uplift for 2026/27 was 3.53%, while the National Living Wage increased by 4.1%, alongside wider inflationary and operating pressures.

If those gaps repeat year after year, providers cannot simply absorb them indefinitely.

This is not an argument against better pay

Quite the opposite.

The people working across social care undertake enormously valuable roles. They support people to live safely, independently and with greater choice and control.

Improving pay should therefore be part of the solution to the social care workforce challenge.

But better pay has to be funded.

When government determines a significant element of a provider’s employment cost nationally while the provider’s income is substantially determined locally, there needs to be a much clearer connection between the two.

Otherwise we risk welcoming national improvements in pay while simultaneously weakening the organisations expected to deliver them.

Four changes would make a difference

1. Greater transparency

We should be able to see how increases in resources available for adult social care translate into the fees ultimately paid to commissioned providers. This is not about removing local decision-making. It is about being able to follow public investment from government announcements through to frontline services.

2. Evidence-led fee setting

Annual fee decisions should properly recognise evidenced movements in the cost of providing care, including statutory workforce costs, employment on-costs and unavoidable operating expenditure.

3. Meaningful engagement before decisions are made

Providers and representative organisations should be involved while fee settlements are being developed, not simply informed once decisions have effectively been made.

4. Stronger national oversight

Government should understand how provider fee settlements vary across England and whether they reflect evidenced changes in the cost of care.

That raises a bigger policy question:

Should England have a national framework setting clear principles for how annual adult social care provider uplifts are determined?

That need not mean setting one national fee. Local circumstances matter. But common expectations around evidence, transparency, engagement and sustainability could give commissioners and providers a much stronger foundation.

There are opportunities too

The Budget’s decision to make the 55p per mile tax-free mileage rate permanent for the first 10,000 business miles, alongside increasing the rate above 10,000 miles from 25p to 35p, specifically recognises care workers among those who may benefit.

There is also a wider shift towards more devolved and preventative public services, with government describing an ambition to transfer resources and decision-making closer to local leaders.

Both are important directions for a sector whose workforce and services are deeply rooted in local communities.

Ultimately, this is about people

Financial sustainability can sound like an argument about percentages, budgets and commissioning mechanisms.

It is not.

Behind those numbers are people who rely on consistent, high-quality care and support to live the lives they choose. And behind those services are colleagues who build relationships, provide continuity and make that support possible every day.

The Budget has set out an ambitious vision for a National Care Service and free personal care. That deserves serious debate.

But the organisations that will ultimately be needed to help deliver the future of social care have to remain sustainable in the meantime.

As we move towards the 2027/28 funding settlement, therefore, the question should not simply be:

How much money are we putting into social care?

It should also be:

How much reaches frontline provision, and is it enough to meet the genuine cost of delivering good care?

Funding social care matters.

Making sure that funding reaches the frontline matters just as much.