Warning tax rises could force care homes to close

The Liberal Democrats have called on the government to exempt social care from the rise in National Insurance.

The party said the chancellor had provided extra funding for the NHS and other public sector organisations to cover the cost of the tax rise – but because the vast majority of care providers are private they would not benefit from this.

Speaking to BBC Radio 4’s World at One programme, Health Secretary Wes Streeting confirmed the NHS would be refunded for the rise in National Insurance contributions.

However, pressed on whether private social care companies would still have to pay the increased rate, he pointed to the extra £600m allocated for the sector.

“The chancellor has taken into account those pressures when making funding decisions,” he added.

Care England, which represents adult social care providers, said without further support the sector was in “unprecedented danger” and the closure of services that were no longer viable was likely.

It said the £600m in funding was “a drop in the ocean compared to the staggering £2.4bn in rising costs associated with wage increases and employer national insurance contributions”.

Mike Padgham runs five residential and nursing homes in North Yorkshire supporting older and disabled people.

He has 210 staff, and his current wage bill is £5.3m a year. He estimates each month the increase in employers’ National Insurance will cost an extra £5,000, and the increase in the minimum wage will add another £25,000.

Most of his residents are funded by the local authority and Mr Padgham says he will have to ask for higher fees.

But care providers have long complained financially squeezed councils do not pay enough to cover the real costs of care.

Mr Padgham, who chairs the Independent Care Group, which represents independent providers, said that as a labour-intensive sector an increase in employee costs was “the last thing social care needed”.

“For a lot of providers this will place existential pressure on them and could well push some out of business, unless it is matched by extra funding to those who commission care and there was little sign of that,” he said.

He said the extra £600m for social care would have “little or no impact” once shared between 152 local authorities and children’s services.

He added: “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.”

Liberal Democrat leader Sir Ed Davey said the increase in National Insurance “risks worsening the NHS crisis by hiking costs for care providers and pushing some to the brink”.

He added: “It just shows that yet again the government seems to have forgotten about care.”