The three biggest threats to adult social care in 2025

Rising employer costs, the end of overseas recruitment and councils that could no longer balance their books were the three threats that defined adult social care in England in 2025. Two of them were on the list our panel drew up at the start of 2024. The third, a rise in employer National Insurance announced in the October 2024 Budget, was not, and it did the most immediate damage.

In January 2024 we asked Jon Glasby, Richard Humphries and Martin Knapp what the year ahead would bring for the sector (read the 2024 edition). They named council finances, a workforce dependent on migration, and the absence of any long-term settlement. This edition tests those warnings against the record for 2025. It draws on Home Office visa data, HMRC rates, Ministry of Housing, Communities and Local Government (MHCLG) funding decisions, Insolvency Service statistics and the sector's own surveys. The calculations are ours. Every underlying figure is public and listed at the end.

2025 in numbers

• Employing one full-time care worker on the National Living Wage cost £2,500 more in 2025/26 than a year earlier, a rise of 10.4%, once employer National Insurance is counted.
• Visas granted to overseas care workers fell from 107,772 in 2023 to 3,161 in 2025, a fall of 97%. The route closed to new overseas applicants on 22 July 2025.
• 30 councils were given exceptional financial support for 2025/26, worth £1.25bn. Two years earlier the figure was 8.
• 97 adult residential care companies in England and Wales became insolvent in 2025, the highest annual total since at least 2016 and up from 58 in 2024.
• Councils overspent their adult social care budgets by £764m in 2024/25 and planned £932m of savings for 2025/26, according to the Association of Directors of Adult Social Services (ADASS).

How the 2024 predictions held up

Threat one: the employer cost shock

In the October 2024 Budget the Chancellor raised the employer National Insurance rate from 13.8% to 15% and cut the threshold at which employers start paying from £9,100 to £5,000 a year, both from April 2025. The Budget also confirmed a 6.7% rise in the National Living Wage, from £11.44 to £12.21. A sector where most frontline staff are paid at or near the wage floor took both increases at full weight.

We modelled the cost of one full-time care worker paid exactly the National Living Wage:

Based on 37.5 hours a week for 52 weeks, standard Category A National Insurance and annual thresholds, before pension contributions and the Employment Allowance.

Employer National Insurance on that one worker rose by 55%. Only £207 of the £999 increase came from the higher wage. The other £792 was the policy change itself. For a provider employing 100 full-time care staff at the wage floor, pay and National Insurance rose by about £250,000 in a single year.

The Employment Allowance doubled to £10,500 at the same time, which helped the smallest employers. It does not help everyone. Employers doing more than half their work in the public sector cannot claim it unless they are charities, and the Homecare Association leaves the allowance out of its costings because providers that mainly deliver council-commissioned care may fail that test. The Nuffield Trust put the extra National Insurance bill for independent providers in England at about £940m in 2025/26, and £2.8bn once the wage rise was added.

Councils did not pass that cost through. The Homecare Association's contract data found an average council homecare rate of £24.10 an hour in 2025/26, and that 73% of councils raised their rates by less than the National Living Wage rose. Comparing the Association's Minimum Price for Homecare, its costed estimate of what an hour of care must cover, with the composite rate ADASS reports councils paying shows the gap widening:

The two series are not measured the same way, so the size of the gap is less reliable than its direction. It widened by more than five percentage points in the year the National Insurance rise took effect.

The consequence shows in the insolvency figures. Insolvency Service data for England and Wales records 97 company insolvencies in 2025 across residential nursing care, residential care for older and disabled people, and residential care for people with learning disabilities or mental health needs. That compares with 58 in 2024 and 76 in 2023, and is the highest total in the series, which starts in 2016. The sharpest rise was in learning disability and mental health services, from 17 to 40. ADASS found that 61% of councils had seen providers close, stop trading or hand back contracts between April and autumn 2025. Those exits affected 4,254 people.

Threat two: the overseas recruitment door closes

The 2024 panel warned that ministers wanted to look tough on immigration before the general election. Both governments since have done more than look tough. Home Office figures for visas granted to people in caring personal services, the occupation group that covers care workers and senior care workers, show the scale:

Most of the fall came before the route formally closed. From 11 March 2024 care workers could no longer bring dependants, and sponsors in England had to be registered with the Care Quality Commission. Grants fell from 20,391 in the last quarter of 2023 to 3,432 in the first quarter of 2024. The May 2025 immigration white paper then closed the route to new overseas applicants from 22 July 2025, and grants in the last quarter of 2025 came to 21.

Skills for Care's figures tell the same story from the employers' side. An estimated 105,000 international recruits started direct care roles in the independent sector in 2023/24, 50,000 in 2024/25 and 30,000 in 2025/26. In 2025/26 only about 1,500 of them came through the Health and Care Worker visa. The rest, 95%, were people already able to work in the UK through dependant, family or student visas.

The vacancy rate kept falling all the same, to 6.2% in 2025/26 (96,000 vacant posts), the lowest since 2015/16. That is not evidence that the threat was overstated. Filled posts rose by 22,000 while the number filled by British nationals fell by 40,000 in the year, and by 130,000 since 2020/21. The posts were filled by people who arrived during the recruitment surge of 2022 to 2024, and by their families. That pool does not refill once the route is shut, and the transitional right to switch into care work from inside the UK ends on 22 July 2028.

Threat three: councils run out of road

The 2024 panel pointed to Birmingham and Nottingham as warnings of what 2024 might bring. The section 114 notices stopped. Emergency government support did not:

Totals are our sums of MHCLG's published tables for each year's general fund support, and exclude support agreed in the same round for earlier years. MHCLG revises individual amounts in later rounds.

Exceptional financial support mostly lets a council borrow, or sell assets, to cover day-to-day spending. Of the 30 councils on the 2025/26 list, 27 are social care authorities, among them Birmingham, Somerset, Worcestershire and Shropshire. That is more than one in six of the 153 councils in England responsible for adult social care. The other three are district councils with no care duties.

Adult social care took 19.3% of all council service spending in the 2025/26 budgets, £26.7bn, a share unchanged from the year before. Excluding education, police and fire, which most councils do not fund from their own budgets, our calculation puts it at 37%. Gross council spending on adult social care reached £29.4bn in 2024/25, up 9% in cash and about 4% after inflation, according to the Department of Health and Social Care. It was still not enough. ADASS found councils overspent their care budgets by £764m in 2024/25 and needed £932m of savings in 2025/26. In its spring 2025 survey 85% of directors had no or only partial confidence that they could meet their legal duty to keep local care markets sustainable.

The threat everyone named and nobody fixed

The one point all three of our 2024 experts agreed on was that a long-term reform plan had to be the next government's first priority for social care. On 29 July 2024 the new Chancellor cancelled the cap on care costs that had been due in October 2025 (see our timeline of the care cap). On 3 January 2025 ministers announced the Casey Commission, with a first report due in 2026 and funding recommendations "by 2028" (our guide to the Casey Commission covers its remit). A commission can produce a plan. It is not one, and 2025 ended without a funding settlement in place.

The 2026 edition looks at what these pressures mean now that the visa route has shut and the local government funding formula has been rewritten.

How we did this

The cost model applies HMRC's published employer National Insurance rates and thresholds to a National Living Wage salary at 1,950 hours a year. Visa figures are Home Office main-applicant grants for occupation group 613, caring personal services, which also includes a small number of nursing auxiliaries and dental nurses. Insolvency counts are Insolvency Service company insolvencies under SIC groups 871, 872 and 873. They cover England and Wales and exclude sole traders and voluntary closures. Exceptional financial support totals are our sums of each year's MHCLG tables. Price gap figures compare two differently constructed series, and should be read as a trend.