Bid to Support South Shropshire's Tax-Hit Care Homes Launched by Stuart Anderson MP
Stuart Anderson MP has called on the government to support health and care providers in South Shropshire. He has written to the Chancellor of the Exchequer, demanding an exemption from the hike on employer’s National Insurance contributions for care homes and providers of domicillary care. It follows a formal written question that Stuart tabled in Parliament after being contacted by local care providers who are concerned about their ability to sustain services following tax hikes announced in the Autumn Budget on 30th October.
The 2024 Autumn Budget revealed £40 billion of tax increases, taking the tax burden to 38.2 per cent of GDP by 2028-29 - the highest level in the country's history. This included increases to the rate of employer NICs by 1.2 percentage points to 15 per cent - a £25 billion tax on working people. Meanwhile, the threshold at which companies start making contributions will be reduced from £9,100 to £5,000 from 6th April 2025.
In a response published on 22nd November 2024, the Exchequer Secretary to the Treasury stated: “Private sector firms or charities, including social care providers, that are contracted by central or local Government will not be exempt from these changes.” Stuart has hit back at the response, saying it risks placing further financial pressure on social care providers at a time in which they are already facing huge demand.
The Office for Budget Responsibility (OBR) has reported that the change will constrain growth in wages and salaries. It has also confirmed that it will reduce labour supply. GPs, care homes, dental practices, pharmacies, and hospices have all voiced concerns about the impact of the increases. The Royal College of GPs, for example, has described the increase as the "straw that breaks the camel's back, forcing them to make tough decisions on redundancies or even closing their practice".
Care homes in South Shropshire provide places for thousands of elderly and vulnerable people, with 31% of residents in South Shropshire being aged 65 or over. The OBR has calculated an average cost of £800 per employee due to these measures. While there are 1.59 million care workers in England, only £600 million was assigned for social care in the Budget. The Nuffield Trust has said that the funding will be "insufficient" to enable councils to keep pace with demand. Alongside the formal question, Stuart recently raised concerns about the changes on the floor of the House of Commons, where he called for a fairer system to support funding for social care in Shropshire.
Stuart Anderson MP said:
"Care homes provide places for thousands of elderly and vulnerable people in South Shropshire. Together with GPs, dental practices, pharmacies, and hospices, they offer vital services in our community. I am deeply concerned by how the Budget will affect them. Although the Budget included more funding for social care, this will be dwarfed by higher costs resulting from increases to Employer's National Insurance Contributions and the National Living Wage. These changes risk placing further financial pressure on social care providers at a time in which they are already facing huge demand, leading to higher costs for both patients and the local authority. The government must urgently change course by granting an exemption to providers in the sector or through dedicated, ring-fenced funds to cover the full costs."
Stuart's question reads as follows:
To ask the Chancellor of the Exchequer, what assessment she has made of the potential impact of changes to employer National Insurance contribution rates on social care providers in South Shropshire; and whether she plans to provide additional funding to help them with these costs.
