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.
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.
Family doctors and pharmacists – who provide NHS-funded services as private providers – also demanded they be exempted from the rise, saying the extra NICs costs could force a reduction in primary care services.
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.
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.
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.
“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,” Maskell said.
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.
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 said.
The charity sector employs 1 million people and delivers around £17bn of services a year in areas such as social care, addiction, health, homelessness and hospice care. Charities estimate they face an extra bill of £1.4bn as a result of the changes.
Sarah Elliott, the chief executive of the National Council for Voluntary Organisations, said the NICs rises were the biggest shock to charities’ existence since the pandemic, and would have “massive consequences” for their users.
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.”
Charity social care providers, who have been in effect subsidising underfunded contracts for years, said they would be forced to “hand back” statutory care contracts if the local authorities that funded 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.”
The chair of another charity, which provides learning disability services, said the rise had “knocked everyone back”, and raised the prospect of “heartbreaking” cuts to care services. “It’s existential for providers like us,” he said.
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 “‘nice to have” quality of life services, such as staffing support for trips and social events.
Although an NICs increase was anticipated, the unexpected lowering of the salary threshold at which they are paid will bring more part-time workers into the scope of the tax, doubling planned costs for some charities.
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 both the NICs rises and a 6.7% boost to the national minimum wage, which could force the charity into a “deficit position” and jeopardise services relied on by 3,500 adults.
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.”
A government spokesperson said: “We have taken tough decisions to fix the foundations so a £22bn boost for the NHS and social care could be announced at the budget.
“The employer national insurance rise doesn’t kick in until April, and we will set out further details on allocation of funding for next year in due course.”
Officials have pointed out that the government will soon enter contract negotiations with GPs, which could help mitigate the impact of the budget, although the Treasury has pushed back on suggestions they will be reimbursed.
