The conditions in social care markets remain challenging for operators. Funding for providers within LDA services is primarily from Local Authority contracts in contrast to older people services, and this means prices paid are heavily reliant on perennially tight Local Authority budgets.

At the same time, inflation and National Living Wage (NLW) have continued to grow at accelerated rates. Most care providers pay their frontline support staff at close to the NLW and this means the impact of increases is felt more keenly than in other sectors.

This can affect the ability of care providers to recruit effectively with high levels of competition within their own industry (across different types of service and cohorts) and externally from retail and hospitality sectors often pulling from the same pool of candidates. Recruitment continues to be a challenge cited by most care providers we engage with, and the resultant cost of agency staff required to meet commissioned hours increases the pressure on provider budgets as these are typically high-cost when compared to directly employed staff.

Barriers to entry for some types of social care contract are relatively low which makes these markets competitive. Current demand for services such as supported living and domiciliary care remains strong but has resulted in placements being made with a vast number of providers.

Other markets do not have as many entrants or active providers and in these cases we can find it difficult to meet demand. Complex services are frequently challenging to commission due to specialist requirements which has the effect of escalating costs for those services that are available.