Care England, the leading voice of adult social care providers in England, supports the Nuffield Trust’s analysis on the increasing financial challenges that the social care sector will face in response to the government’s budget. Care providers have faced chronic financial instability of which will now be even further compounded by changes to the Employment National Insurance Contributions (ENICs) and the rise in the National Living Wage. Care providers will be unable to absorb these significant costs without severe consequences.
The Nuffield Trust’s report succinctly highlights the combined effect of the 1.2 percentage point increase to ENICs, and the lowering of the earnings threshold, will cost care providers £940 million in 2025/26, which is completely unsustainable.
Alongside this, the 6.7% increase to the National Living Wage is a significant cost to the sector. While the rise will benefit care workers, the associated cost increase is estimated to add £1.85 billion to the sector’s wage bill. When combined with the changes to ENIC, the total additional cost faced by the independent sector is almost £2.8 billion in 2025/26. As most care providers already operate on low margins, these additional costs are unsustainable for many smaller and medium organisations, which make up 98% of the market.
Professor Martin Green OBE, Chief Executive of Care England, commented:
“The government’s budget was a missed opportunity to adequately support the social care sector, which has chronically faced financial strain. The changes to the National Insurance Contributions and the increase in the National Living Wage, while well-intentioned, will further deepen the financial crisis that care providers are already facing. It is essential that the government recognises that the social care sector cannot continue to bear these financial pressures alone. Without urgent intervention, many care providers are at risk of closing all or parts of their services, handing back contracts, and abandoning future investment and capacity building. This will have a direct and devastating impact on the quality of care that people rely on.”
As the Nuffield Trust concisely points out, local authorities are set to overspend on their budgets. The £600 million earmarked for social care is a complete shortfall, as it is significantly less than the £2.8 billion required to plug the gap and to ensure the sector remains afloat. Without sufficient government support, it is highly likely that a significant number of care providers will be forced out of business, further destabilising the sector, impacting hospital discharges and lead to challenges for local authorities to source care with insufficient funding from central government putting ever more pressure on the NHS. The funding gap will see care providers letting go of staff as underfunded care packages are handed back, which will directly impact the Government’s ability to raise ENIC revenue is set out to do and inhibit their wider plan to strengthen Britian’s economy and make work pay.
Professor Martin Green OBE concluded:
“If the government does not step in and exempt social care providers from ENICs or provide the significant additional funding needed, local authorities will be unable to meet the demands of the sector, as care providers will be left with no choice but to refuse admissions or hand back packages of care, scale back services or close entirely. The government has long promised reform of social care, but without urgent action to stabilise the sector, there will be little left to reform. If we do not protect the financial viability of the social care sector now, the consequences will be catastrophic. Care England stands with Nuffield Trust’s assessment that there needs to be immediate and substantial investment in social care to ensure that care providers continue to operate and deliver high-quality care.”
Care England stands ready to work with Government, local authorities, and other stakeholders to secure the future of social care. However, this will require urgent recognition of the sector’s financial difficulties and the re-allocation of sufficient resources.
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