Changes in the National Living Wage, a reduction in the wage threshold for employers to pay National Insurance, and the National Insurance Contribution rate will soon have an affect on all care providers in the UK. Challenging times lie ahead as providers and local government authorities come to grips with these changes.
Below is an interesting excerpt from an article featured on communitycare.co.uk. The article covered a 'day of protest' by some providers that were rallying parliament for a change to the new laws which are higlighted below and due to be put into action from April 2025.
A 6.7% rise in the NLW, from £11.44 to £12.21 an hour, benefiting hundreds of thousands of care workers.
A rise, from 13.8% and 15%, in the contribution rate for employers’ national insurance.
A reduction in the wage threshold at which employers start paying national insurance, from £9,100 to £5,000 a year.
Estimated £2.8bn in additional costs
Think-tank the Nuffield Trust has calculated that the measures will cost independent care providers in England an extra £2.8bn in 2025-26: £940m in additional national insurance and £1.85bn in extra wage costs.
With councils purchasing an estimated 70% of the care these providers deliver, the Nuffield Trust said authorities would have to find £2bn of this bill.
The government’s finance settlement for councils includes a £880m top-up to the existing social care grant, which can be used on adults’ and children’s services. If councils allocate 60% of this to adults’ services, in line with current practice, this will yield £528m in 2025-26.
Question marks over extra resource for councils
In addition, authorities may increase council tax by up to 2% and ring-fence the proceeds of this for adult social care, raising about £650m and bringing the total amount of extra dedicated resource for the sector in 2025-26 to almost £1.2bn.
Authorities may also raise council tax by a further 3%, without putting the issue to a local referendum, and have also been given a £600m ‘recovery grant’, providing further resource that can be used on adult social care.
However, councils will also need to use much of this money to deal with other pressures, not least in children’s services, while county authorities have warned that they will be receiving very little of the recovery grant because it is distributed based on deprivation.
Social care ‘already underfunded’
Moreover, councils and providers alike have repeatedly warned that the autumn Budget measures will hit a sector that is already underfunded.
For example, last year, the Homecare Association calculated that there was a £1bn shortfall in home care fees paid by commissioners and the amount required by providers in England to pay staff the NLW, meet other costs and make a 5% profit or surplus.
