The economic and social value of the UK adult social care sector
Skills for Care and Development is an Alliance of seven organisations in the UK and the Republic of Ireland that focuses on regulation and workforce development in social care, social work, and early years. The Alliance commissioned Alma Economics to analyse the economic and social value of the adult social care sector in the UK and each of the four nations.
For this research, our team developed two types of models for each nation: one focusing on macroeconomic impacts and the other on socioeconomic impacts. Both models consider a wide range of care settings (e.g., residential) and types of service provision (e.g., local authority/local trust (NI)), including informal care, across regulated and non-regulated sectors.
The macroeconomic models estimate the contribution of the adult social care sector to the UK economy by accounting for wages and earnings of employees in the sector, as well as the operating profits of independent care providers (direct impact).
Direct impact
Our estimates suggest that the adult social care sector creates around £34 billion in Gross Value Added (GVA) and supports approximately 1.3 million full-time equivalent (FTE) jobs, with a labour productivity of around £26,600 per FTE.
When informal care is included, the direct GVA is estimated at around £140 billion, and the number of FTEs at almost 6 million, yielding a labour productivity of approximately £23,200 per FTE.
Indirect and induced impacts
We then considered the indirect and induced effects of adult social care in the UK, using impact multipliers from the literature. The indirect effect arises from increased demand in other sectors that are part of the adult social care sector’s supply chain, such as personal protective equipment.
Both direct and indirect effects lead to a rise in household income across the economy, driven by increased employment. A portion of this additional income is spent on other goods, which constitutes the induced effect.
The indirect effect, i.e., the value and employment created in other sectors due to the adult social care sector, is estimated at around 450,000 FTEs and £16 billion of GVA. Similarly, the induced impact, resulting from the additional spending of individuals directly or indirectly employed in the sector, is estimated at around 260,000 FTEs and £23 billion of GVA.
Overall, the adult social care sector in the UK supports around 2 million full-time equivalent jobs and generates approximately £71.4 billion in value when considering direct, indirect, and induced impacts, not including informal care.
The estimated GVA of the adult social care sector represents approximately 3% of the total GVA in the UK in 2023 [1].
Impacts by country
The majority of the impact originates in England, with approximately £60.2 billion of GVA and 1.6 million FTEs. Scotland has the second greatest macroeconomic impact due to adult social care, with the sector creating around £5.2 billion in GVA and 170,000 FTEs. In Wales, the adult social care sector contributes approximately £4.6 billion in GVA and 120,000 FTEs, while the respective estimates for Northern Ireland are around £1.5 billion and 47,000 FTEs.
The adult social care sector also creates a wide range of benefits that are not captured in GVA or employment measures, such as improved wellbeing of adults receiving care and greater peace of mind for the general population.
Socioeconomic impacts
To estimate the magnitude of these socioeconomic impacts, we compared the costs and benefits of adult social care to a hypothetical scenario in which the adult social care sector (both formal and informal) ceases to exist.
Our estimates suggest that for every £1 spent in adult social care in the UK, there are around £2.40 in socioeconomic benefits.
Impacts by country
Northern Ireland achieves the highest Benefit-Cost Ratio (BCR), with a return of around £2.90 for each invested pound. Wales ranks second, with a BCR of approximately £2.80, followed by England (£2.40) and Scotland (£2.00).
At the end of the project, we delivered a detailed report and executive summary for the UK and individually for each of the four nations, as well as the underlying Excel models to be used as a lasting tool. We further produced infographics illustrating the main results of our analysis to help promote public engagement.
The findings of this project will be used by the Alliance to inform public policy and improve public understanding, as well as reframe social care as an essential social and economic investment.
To read the full reports, click here.