CARE providers will be pushed ‘to the brink’ by the failure to exempt them from a national insurance rise, ministers have been warned.
Chancellor Rachel Reeves was last night accused by leading industry figures of ‘forgetting about care’ in Labour’s quest to revive the NHS.
Ms Reeves hiked NI contributions by 1.2p and reduced the salary threshold in order to raise money for public spending.
But while public sector organisations, including the NHS, were exempt from the extra tax, most care providers are run privately, and so will be liable.
Lib Dem Leader Ed Davey said: ‘Hammering small businesses with a tax hike is the wrong choice.
Chancellor Rachel Reeves was last night accused by leading industry figures of ‘forgetting about care’ in Labour’s quest to revive the NHS
Ms Reeves hiked NI contributions by 1.2p and reduced the salary threshold in order to raise money for public spending
Lib Dem Leader Ed Davey said: ‘Hammering small businesses with a tax hike is the wrong choice’
‘It will hit people’s wages and jobs, but it also risks worsening the NHS crisis by hiking costs for care providers and pushing some to the brink.
‘It just shows that yet again the government seems to have forgotten about care. At the very least, the Chancellor should be exempting social care from this costly jobs tax.’
The party says that 98 per cent of care providers – 18,000 organisations – are small employers who will be hit by the levy.
Mr Davey – who centred the party’s election campaign around social care – welcomed an increase in the carer’s allowance, but suggested a £600million grant for the sector fell far short of what is needed.
He told BBC Radio 4’s Today Programme: ‘I’m really worried about the tax proposals that have been put forward.
‘What they’re doing on care is a real worry – if you’re going to sort out the NHS, you need to sort out social care, and there was almost nothing on that in the Budget.
‘The Government have exempted the NHS from rising employers’ National Insurance contributions, but small care providers – who are about 98 per cent of those providing care in care homes and people’s own homes – are going to be hit by this rise.
‘Many of them will go to the wall. This is really serious – if you’re seeing the care sector non-invested and care providers leaving the market, that’s going to undermine care and make the NHS problems even worse.’
Chancellor Rachel Reeves said the country had ‘voted for change’ and vowed to ‘invest’ as she mounts one of the biggest raids in history in the Commons
Industry figures also warned that the minimum wage hike from £11.44 to £12.21 an hour only compounded their problems.
Vic Rayner, CEO of the National Care Forum, said: ‘Far from heralding a new dawn for social care, this historic budget appears to do little to recognise the vital role that social care plays in the lives of millions of people up and down the country.
‘Adult social care providers will be hit particularly hard by the government’s planned changes to employers’ National Insurance contributions.
‘Unless fully funded, these increases alongside the welcome raising of the National Living Wage will combine to apply an enormous financial strain and also undermine their ability to focus on the real need to improve care workers’ pay, terms and conditions.’
Rachael Dodgson, Chief Executive of support provider Dimensions – which supports 3,500 people – said the national insurance rise would cost them £5m next year and the minimum wage hike another £10.2m.
She added: ‘[The £600million grant] won’t be enough to cover the increased costs we’ll face, and we will be reliant on uplifts from local government commissioners to pay for these increases. From what we can see, the budget does not provide the extra funding local authorities will need to support this.’
Care home bosses have already warned about the damaging impact of the Budget.
Claire Rintoul, manager of Sheffcare, a non-profit organisation caring for elderly and vulnerable people across Sheffield, said the increase in National Insurance will cost them £380,000 a year.
She told ITV News: ‘This wasn’t budgeted for, it wasn’t planned, it was completely out of the blue. We didn’t see £380,000 coming.
‘The needs of our residents are getting higher and we need more staff if anything. It’s really hard to think, where is the money going to come from? What are we going to have to cut?’
Mike Padgham, chair of The Independent Care Group (ICG) and the owner of five care homes in North Yorkshire, said the rise in tax and wages would cost £360,000 a year.
A Government spokesman said: ‘We know there is more to do to tackle the significant challenges facing social care, and we will work closely with the sector to build a National Care Service based on clear, consistent standards that will improve the quality of care across the country.
‘We have taken a critical step forward by introducing legislation that will establish the first ever Fair Pay Agreement for care professionals, and the Chancellor announced at least £600 million of new social care grant funding, which is part of a wider package to bolster support for councils.
‘We are also increasing the Carer’s Allowance earnings threshold, giving unpaid carers the opportunity to earn more and still receive the government support they deserve.’
