A 7.5% rise in council funding for 2024-25 will leave care providers footing the bill, a care leader has warned.

Steve Veevers, chief executive of Hft, said care providers would have to make up the over the two percentage point difference between the 7.5% the rise in the local government finance settlement for 2024-25 and the 9.8% increase in the National Living Wage.

Veevers said: “This discrepancy between the increase to the settlement of 7.5% and the upcoming National Living Wage increase of 9.8% means it is highly unlikely that local authority fees will be able to cover the cost of care, leaving care providers to foot the bill.

“This chimes with our latest Sector Pulse Check report, written in partnership with Care England, which reported that 79% of adult social care providers said that local authority fees did not cover the costs associated with the increasing National Living Wage. This is likely to remain the status quo.”

The government confirmed this week a 7.5% rise in the local government finance settlement to £64 billion for 2024-25.

The package includes £500 million for social care that was announced on 24 January.

There is a total of £1.5 billion in additional funding for social care compared to 2023-24, bringing the total grant funding for social care to £8.7 billion.

Councils will be able to increase council tax by up to 3% without a local referendum, with a further 2% for those responsible for adult social care services.

Veevers added: “We are mindful that it is positive that, in comparison to the provisional settlement, social care will receive an additional £500 million, but as we have already highlighted, this amounts to just £2-3 million for each local authority, split across children’s and adult social care, so in real terms this is a paltry amount for our sector.

“The government doesn’t seem to realise the gravity of the situation. When will they properly support and recognise our sector with the financial sustainability it so desperately needs?”