The adult social care sector is at risk of collapsing within months, according to providers, who are warning about the impact of the government’s planned hike in national insurance contributions (NICs) and the national living wage (NLW), which will take effect in April.
Thousands of elderly and vulnerable individuals depend on social care services provided by independent operators on behalf of local authorities.
However, without additional funding, smaller providers are unable to manage the increasing costs.
The National Care Association (NCA), which represents over 1,000 small and medium-sized care providers, is warning of significant changes and possible service closures in the sector.
Nadra Ahmed, the NCA’s co-executive chair, stated that service providers may close, merge with other providers, or reduce the number of care packages they offer, predicting a major shift in about six months.
A company in Lancashire that provides daily care for approximately 450-500 households may have to cease operations as it cannot afford the NIC increases.
Leanne Reeder from Homecare Services, in an interview with the Politics Weekly UK podcast, suggested that without sufficient funding, service providers cannot continue to pay staff wages.
Service providers are not the only ones affected; private contractors in other areas, such as transportation for children with special educational needs and disabilities, are also considering shutting down services.
Cuts to these services could leave thousands of families without the means to access necessary education and care.
The changes to NICs and the living wage were announced by Chancellor Rachel Reeves in the budget last October.
NICs will increase by 1.2%, and the NLW will rise by 6.7%, from £11.44 to £12.21 per hour.
Providers fear that these changes will further increase “bed-blocking” in NHS hospitals, as patients cannot be discharged without appropriate care packages being available.
MPs recently voted against exempting private hospices, care providers, independent pharmacists, and specialist transport services from the NIC increase.
Ed Davey, the Liberal Democrats leader, urged the government to cancel the “damaging tax hike,” which he believes will be detrimental to social care and the NHS.
The government argued that they are addressing the social care system’s crisis with a £3.7bn funding boost and the introduction of a “fair pay agreement” for care professionals.
In recent years, adult social care has faced significant challenges, including inadequate funding from local authorities and recruitment difficulties.
In September 2023, there were an estimated 131,000 job vacancies in the care sector.
In January, the government established a taskforce to develop plans for a new national care service, led by cross-bench peer Louise Casey, but the timeline has been criticized for being too slow.
