Health providers ‘pushed to the brink’ by Labour’s national insurance rise | Politics | News

The analysis shows that Labour’s disruptive hike in national employer insurance would risk the collapse of social care providers.

The Nuffield Trust think tank found that the budget had “not so much left social care on the sidelines as pushed it right over the edge of the cliff”.

It is estimated that the 18,000 providers of adult social care in England will face a total increase in employer National Insurance costs of £940 million.

Combined with planned increases in national minimum wage rates, the bill will rise to £2.8 billion in the next financial year.

Natasha Currie, deputy director of policy at the Nuffield Trust, said: “Faced with a series of financial black holes in almost every corner of the public sector, the Government faces the unenviable task of urgently raising funds in the Budget to plug them.

“But if you choose not to support adult social care providers to meet the costs of raising ENIC, the result is likely to be disastrous.”

Six in 10 workers employed in the independent social care sector were paid less than the current minimum wage as of March, the Nuffield Trust said.

The increase would more than wipe out the additional funds allocated for social care in the budget and put many service providers at risk of going bankrupt, failing or ceasing to provide care to thousands of older people.

Small and medium-sized organizations are expected to be hit particularly hard and will be more limited in their ability to absorb additional costs.

Most providers will not be able to cover the costs, so they will have to pass the costs on to those paying for their own care, or ask local authorities to pay higher fees to those eligible for government-funded care.

Ms Curry added: “Adult social care, already fragile after a decade of cuts, rampant inflation and the impact of Covid-19, was in desperate need of help. But it was a budget that gave with one hand and took away with the other.

“The Government rightly wants to reform social care, but with the real prospect of some parts of the social care market collapsing under the pressure of extra costs, there may be little left for reform unless the Government takes urgent action to cover ENIC for adult social care. care providers.”

Local authorities buy around 70% of services provided by independent social care providers, meaning councils will have to find an extra £2 billion if they want to increase the fees they pay to offset these higher costs.

The effect will dwarf both the extra £600m allocated to social care (for both children and adults) in the Budget and the effects of increased local government grant and changes to council tax rates, which are expected to raise a total of around £2bn pounds sterling. for all municipal services.

Cllr David Fothergill, chairman of the Local Government Wellbeing Board, said councils were already facing severe funding and demand pressures, “meaning finances are under strain like never before”.

He added: “With the vast majority of councils currently struggling to balance their books, the spending on increases in the National Living Wage and Employers’ National Insurance announced in the Budget must be fully funded.

“At its best, adult social care helps adults of all ages live the lives they want to lead. But a number of serious issues that councils have been raising for many years remain and adequate and immediate investment is needed to address unmet and underserved needs and ensure timely access to social care for everyone who needs it.”

A Department of Health and Social Care spokesman said: “This Government inherited a social care system in crisis. We are committed to tackling the big challenges and building a National Health Service so everyone can access the high-quality care they deserve.

“That’s why we have taken tough decisions in the Budget to lay the groundwork for restoring stability to our public services, and we are providing councils with £1.3 billion of new funding for 2025-26, including at least £600 million for social care.

“In addition, we have committed an additional £86 million to the Disability Grant to strengthen support for councils and people in need of social care.”