Rachel Reeves is facing a growing backlash over her national insurance hike as GPs, care homes, dentists and hospices have called for an exemption from the charge.
The chancellor is piling pressure on GPs and the care sector with her increase in the employer rate of national insurance – at a time when the services are already under severe strain.
But while the NHS and the rest of the public sector have been shielded from Ms Reeves’s national insurance hike, GPs, hospices and care homes have been left to bear the brunt. The rise in national insurance contributions came alongside a reduction in the threshold at which employers pay the charge and a 6.7 per cent increase in the minimum wage, exacerbating the headache for those affected.
Health secretary Wes Streeting has said that the UK’s palliative care provision is in such a dire state that he would not vote to support an assisted dying law, while the Commons public accounts committee has said the social care sector is “on its knees”.
Meanwhile, GPs are struggling with a recruitment crisis, with staff shortages growing at a time of rising demand.
Treasury chief secretary Darren Jones cleared up the initial confusion when he confirmed on Friday that GP practices will have to pay the increased employer national insurance rate.
“GP practices are privately owned partnerships. They’re not part of the public sector National Health Service system. And so, yes, they will have to pay national insurance contributions as employers,” he told Times Radio.
The Liberal Democrats said Labour had squandered the chance to “rescue GP surgeries from years of neglect”, calling on Ms Reeves to exempt them from the tax hike.
Health and social care spokesperson Helen Morgan said: “This new government must not make the same mistakes as the Conservatives. Fixing the GP crisis is crucial for saving the NHS.
“If people can be checked quicker, fewer will end up in hospital for treatment. That’s better for patients, better for the NHS and better for taxpayers.”
GP and deputy chair of the British Medical Association Dr David Wrigley added that the impact of the Budget on GP surgeries would be “monumental”. “Many are already on a financial tightrope due to years of neglect. We need a rapid announcement of full reimbursement,” he added.
And the Royal College of GPs called for “urgent assurances” that they would be given the same protection as the rest of the NHS and the public sector.
“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,” said its chair, Professor Kamila Hawthorne.
Meanwhile, Mike Padgham, chair of the Independent Care Group, said he was “dismayed” at the chancellor’s decision to pass the increased tax rate on to the already struggling sector.
Responding to Ms Reeves’s decision, he welcomed a funding boost for the sector but said: “Any extra funding that might reach providers will be wiped off instantly by the increases in national insurance and minimum pay, which will together heap further pressure on social care providers.
“For some, they may well be the final straw.”
And Age UK director Caroline Abrahams said the changes would hit care homes, but would also hit older people who pay their own care fees and may find them climbing in response to the Budget.
She told The Independent that many care providers are already sounding the alarm over the tax hike, which risks further reducing the supply of social care in some areas.
Ms Abrahams said: “The idea that social care providers are all big companies that are rolling in money and can easily afford to pay more tax is sadly far from the truth: in fact, many are small businesses operating on tight margins, or charities and not-for-profits ... The government may have to think again and provide them with some protection.”
The British Dental Association (BDA) wrote to Ms Reeves calling for dentists to be exempt from the national insurance hike “as a bare minimum”, citing the “significant impact” of the tax changes unveiled on Wednesday. “At a time when government policy is to shift focus from secondary to primary care, dental practices cannot be excluded from support offered to hospitals,” BDA chair Eddie Crouch and chief executive Martin Woodrow said in the letter.
They added: “Hundreds of NHS providers are already delivering NHS treatments at a financial loss. Failure to soften this blow will push more of them closer to the brink, or with no choice other than to move away from NHS provision.”
Lobby group Hospice UK said those providing NHS services should get the same treatment as bodies inside the NHS.
Chief executive Toby Porter told The Independent that the sector is already under major financial pressure, and warned that staff pay is the biggest portion of a hospice’s running costs. “So it’s disappointing the chancellor didn’t exempt charities, or providers of NHS services which aren’t formally part of the NHS, from the national insurance rise,” Mr Porter said.
Asked on Friday about the exemption controversy, Mr Jones said: “Many GP practices are small organisations, and so they will pay less than some of the bigger businesses that we’re asking to contribute more at this Budget.”
Mr Streeting has said he is “working through” which healthcare providers are going to be hit by the employer national insurance hike.
He told the BBC’s World at One programme: “I’ll have more to say on that in the coming weeks in terms of what we can do more quickly to deliver the shift I’ve wanted to see for some time, in the focus of NHS investment spending out of hospitals into primary and community care.”
