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Ministers urged to protect GP practices, charities and care homes from NIC rise Services for UK’s most vulnerable at risk after NICs rise, charities say
(about 3 hours later)
Doctors and care providers warn increased costs will cause job losses and cuts in services Care providers, GPs and pharmacists warn increased costs will cause cuts and job losses
Ministers are under pressure to reimburse or exempt GP practices, charities and care homes from increases in national insurance amid warnings they will cause job losses and cuts in services. Services that support some of England’s most vulnerable people have warned that tax increases in the budget will lead to cuts and closures that could devastate the charity sector.
The rise in national insurance contributions (NICs) has prompted post-budget alarm from doctors and the voluntary and social care sectors, and pleas to ministers for exemptions to avoid widespread cuts to provision. Although the NHS and councils are protected from the impact of the rise in employers’ national insurance contributions (NICs) announced in Wednesday’s budget, charities that provide services say the increase means they will face “existential” financial pressures.
Doctors have warned that the changes will lead to redundancies in cash-strapped GP practices. Voluntary sector leaders have written to the chancellor, Rachel Reeves, calling on her to reimburse charities for a change that they estimate will cost charities £1.4bn. Family doctors and pharmacists – who provide NHS-funded services as private providers – also demanded they be exempted from the £25bn rise, warning that the extra NICs costs would force a reduction in primary care services.
Care England says the new charges and the increase in the minimum wage will cost social care providers £2.4bn – which will swallow up the £600m provided to the sector in the budget. It called for an “urgent revision” of the budget. Ministers are under pressure to intervene to prevent a financial crisis among charity providers, including those delivering high-cost care to adults with learning disabilities, severe autism, complex needs and severe physical disabilities.
Darren Jones, the chief secretary to the Treasury, insisted that organisations outside the public sector, including GPs, would not be exempt. “They will have to pay employer national insurance contributions in the same way they normally do, and therefore at the higher rate,” he told BBC Breakfast. The backlash over NICs has thrown fresh light on the crisis facing social care, which took a backseat in the budget compared with the NHS. The health service got an extra £22.6bn, while councils in England received just £600m more to cover adult and children’s social care.
Asked about warnings from care homes that changes will wipe out extra funding for the sector, he suggested there may be further negotiations in future. The Liberal Democrat leader, Ed Davey, has called for social care providers to be exempt from the NICs rises, while the Labour backbencher Rachael Maskell called on ministers to consider the impact of the increase on GPs, care providers and hospices.
Jones said: “We’ll have to work through that with them, given that we ultimately pick up the bill for social care.” “We know that these contracted health and care services have been through a lot of financial strain under the last government, and they too need to fix their foundations and build stability for the future,” she said.
On concerns about GP practices, a Downing Street spokesperson said that forthcoming contract negotiations would determine funding levels. Kamila Hawthorne, the chair of the Royal College of GPs, called on ministers to protect family doctor services. “We have very serious concerns about the impact of the increase in national insurance employer contributions on GP practices right across the country, many of whom are already struggling to keep their doors open and make ends meet due to historic chronic underfunding,” she said.
The BMA’s council chair, Philip Banfield, said: “The increase in employment costs will squeeze GP practices even further. We need immediate reassurance from the government that it will provide additional funding to general practice to cover these costs.” Although the government has said it will create a national care service, and has hinted it will set up a royal commission on social care to examine future funding options, there was frustration at the slow pace of change. “I’m not sure Labour really understands the political fallout of all this,” one charity care boss told the Guardian.
Katie Bramall-Stainer, the chair of the BMA’s general practice committee, said that since the budget she and Banfield had relayed the alarm of doctors to health ministers. “We explained quite how concerned GP partners and practices will be about rising employment costs from April,” she posted on X. The shockwaves from the NICs rises were being felt across the charity sector, which employs 1 million people and delivers around £17bn of services a year in areas like social care, addiction , health, homelessness, and hospice care. Charities estimate they face an extra bill of £1.4bn as a result of the changes.
Paul Stanley, a practice manager at Gas House Lane Surgery in Morpeth, Northumberland, told BBC Radio 4’s Today programme the changes could cost his surgery about £40,000 a year. “It is a huge amount of money and our staff costs do equate to, I would probably say, about 65-70% of all of the costs of the practice,” he said. Sarah Elliott, the chief executive of the National Council for Voluntary Organisations (NCVO) said the NICs rises were the biggest shock to charities’ existence since the pandemic, and would have “massive consequences” for the users of charity services.
“I think what we’re looking at is an unfunded increase in our staffing costs, which may ultimately impact on our resources and our staffing levels.” She added: “Charities across the country are already in a dire situation, juggling a triple threat of rising demand, escalating costs, falling funding. This additional cost, for which there is no headroom in budgets to cover, will be devastating.”
GP practices will start to make redundancies, according to Dr Jess Harvey, a GP based in Shropshire. There was alarm and despair among charity social care providers, who have been in effect subsidising underfunded contracts for years, and who warned they will be forced to “hand back” statutory care contracts if the local authorities which fund the services failed to meet the extra costs.
One boss of a social care charity that provides care for thousands of disabled adults said: “We all had a warm feeling this was a government that would listen. We weren’t expecting what we got, which is a kick in the teeth. That’s the surprise – it’s the absolute beating they have given us”.
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“During these contract negotiations for our new contract, unless we’re getting given suitable remuneration to cover this national insurance inflation, then we’re going to really struggle,” she told Today. The chair of another charity, which provides learning disability services, said the unexpected NICs rise had “knocked everyone back” and raised the prospect of “heartbreaking” cuts to care services. “It’s existential for providers like us,” he said.
Care providers backed calls to exempt social care providers from the NI rise. There are fears charities will revert to bare-minimum levels of service – sometimes called “warehousing” – for people with complex disabilities, with providers forced to cut so-called “‘nice to have” quality of life services such as staffing support for trips and social events.
The Independent Care Group chair, Mike Padgham, said: “The government has to do something and it has to do it quickly, as I am already hearing from providers that this might be the last straw for some of them.” Although there was anticipation the budget would herald an increase in NICs, the unexpected lowering of the salary threshold at which they are paid brought more part-time workers into the scope of the tax, doubling planned costs for some charities.
Geoff Butcher, of the Blackadder Corporation, which owns a number of care homes in England, said he believed the rise in NICs for employers could lead to some homes having to shut. Jim Kane, the chief executive of Community Integrated Care, one of the UK’s largest social care charities, said it faced a £12m shortfall from next April as a result of the NICs rises and a 6.7% boost to the national minimum wage, which could force the charity into a “deficit position” and putting at risk services relied on by 3,500 adults.
“We will certainly not be taking on additional staff. We will be having to cut back on improvement,” he told Today. Rachael Dodgson, the chief executive of Dimensions, which provides services for people with learning disabilities and autism said: “It is very clear that the actions taken in this budget do not match the rhetoric from the Department of Health and Social Care since the election about the need to fix the social care sector.”
In their joint letter to Reeves, the chief executives of the National Council for Voluntary Organisations and the Association of Chief Executives of Voluntary Organisations, said: “The decision to increase employer NICs – and not to carve out an exemption for them – will place another major strain on charities at a time when we are already struggling. Downing Street defended the tax hike on Friday. A spokesperson said: “The approach with regard to national insurance contributions that we’ve taken has been consistent with the approach taken by previous governments, whereby the government will cover the costs for central government departments, public corporations and local government.”
“The harsh reality is that many organisations may be forced to reduce staff, cut salaries, and most importantly, scale back services for the very people they strive to support.” Officials point out that the government will soon enter contract negotiations with GPs, which could help mitigate the impact of the budget. But the Treasury has pushed back on suggestions they will be reimbursed.