Providers hold day of action in protest against Budget’s impact on social care

Providers are holding a day of action in protest against the impact of the autumn Budget on adult social care.

The Providers Unite event today includes a rally at the Houses of Parliament to lobby MPs on the implications for the sector of the increases in employer national insurance contributions and the national living wage (NLW), which are due to come into force in April.

The campaign is calling on the government to review the measures, with 3,900 providers and people having signed a letter to chancellor Rachel Reeves warning that the policies risk “eroding the foundations” of adult social care services.

What are providers protesting about?

In the autumn Budget, in October 2024, Reeves announced:

• 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.

Speaking ahead of the day of action, the association’s chief executive, Jane Townson, said: “Losing access to quality home care risks harm to people needing care, adds burdens to family carers, and piles pressure on an over-stretched NHS.

“Today, we stand united with homecare providers and their care workers with one message: enough is enough. The government’s refusal to exempt our sector from the latest national insurance hikes, coupled with a lack of proper funding for the minimum wage increase, risks devastating disruption of homecare provision.”

Peers vote to exempt care providers for NI increase

On the day of the rally, the House of Lords voted to exempt adult social care providers – along with NHS-commissioned healthcare providers and hospices – from the increase in national insurance contributions.

This was through an amendment to the National Insurance Contributions (Secondary Class 1 Contributions) Bill, the piece of legislation that will bring in the change.

The bill is due to be subject to a final vote in the Lords – at the third reading – before returning to the House of Commons, which will consider amendments to the legislation made by peers in order to agree a final version of the bill.

Sector representative body Care England welcomed the amendment, with chief executive Martin Green saying: “This is a huge moment for the social care sector and a testament to the relentless campaigning from care providers, local trade associations, national bodies, the Care Provider Alliance, and Providers Unite. For too long, social care has been overlooked, but yesterday’s vote proves that when we come together, our voices can no longer be ignored.”

Prospects for success

However, the government is almost certain to use its sizeable majority in the Commons to overturn the amendment on exempting care providers from the national insurance contributions increase. The House of Lords would be unlikely to press its case in relation to the amendment, in that event.

Next month, fiscal watchdog the Office for Budget Responsibility will assess whether the government is on course to meet its fiscal rules: that by 2029-30, it should only be borrowing to invest and that public sector net debt should be falling as a percentage of national income (source: Institute for Government).

The pressures on the public finances means the OBR may judge the government to be on track to miss the first of those rules unless the government takes reparatory action, such as raising taxes or cutting spending (source: Institute for Fiscal Studies).

This hugely limits the prospects for additional investment in services including social care.