Mr Padgham has warned NI rises from April will have a devastating impact on the social care sector (Image: Andy Commins / Daily Mirror)
Councils are set to slap inflation-busting council tax increases to pay for a Budget that has sparked panic in social care.
Next month local authorities – which levy council tax rates – will find out how much cash they get in their annual settlement.
The calculations include lump sums, redistributed business rates and suggestions on how to set budgets.
But cash-strapped town halls have warned they have no money to pay invoices from social care providers passing on higher fees because of Labour’s National Insurance raid.
As revealed in the Daily Express on Saturday, October’s Budget has sent business in the broken sector reeling and desperately trying to work out how they will fund employers’ NI hikes levy will as the threshold at which firms pay it is lowered. It comes as record numbers of frail, vulnerable and elderly patients will need around-the-clock help – most of them placed by councils with local providers.
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Chancellor Rachel Reeves announced £600 million for social care and £86 million for the Disabled Facilities Grant as “part of a wider package to bolster support for councils” in last month’s Budget.
Yet industry experts said the sum barely scratches the surface. It is estimated there is a £8.4 billion difference between available funding for social care and the cost of keeping services at their present level.
They argue the “politically toxic” crisis is the result of a decades-long refusal to wrestle with the challenges of how we care for an increasingly ageing population with more complex needs.
Increased care costs will be passed on to local authorities but there are genuine fears many will refuse to pay, meaning providers could go bust leaving record numbers of those in need of support without care.
Campaigner Mike Padgham, Chair of The Independent Care Group which speaks for providers, said: “Even with the additional £600m announced for local authorities in the Budget, it is likely in my view councils will have to raise their council tax by the maximum allowed at 5%.
“That will place additional burden on households, but even with that increase, it is likely that will still not be enough to prevent local authorities dipping into their reserves or cutting services or both.
“Local authorities are set to overspend on social care by £564m this current financial year. The Health Foundation estimates an additional £1bn would be needed to keep pace with demand next year.
“The total cost to the sector of the NiC and NLW changes id estimated to be £2.8bn meaning unless these costs can be passed on, there is likely to be catastrophic failure with social care providers and negatively impacting on the NHS.”
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Cash-strapped councils are set to pass on huge rate rises to cover increasing costs (Image: Andy Commins / Daily Mirror)
The rise in employers’ NI contributions was a centrepiece of Labour’s first Budget in 14-years. From April, employers will pay 15 per cent on salaries above £5,000, compared with 13.8 per cent on salaries above £9,100 now. In addition, the National Living Wage will increase to £12.21 an hour, while the National Minimum Wage, for those aged 18-20, will rise to £10 an hour from the spring.
The stricken sector – mainly propped up by independent businesses commissioned to deliver care packages for the vulnerable by councils – has been drowning under the weight of demand for years.
The triple whammy will force some providers to cut and run, creating a huge loss of capacity and heaping further pressure on an already-overrun NHS.
One provider employing 167 full-time and 45 part-time staff looking after 137 people in five homes and one day care centre in Yorkshire, said: “The rise next April will mean an extra £14,000 a month, or £168,000 a year on National Insurance Contributions and the National Living Wage a further £22,000 a month or £264k a year meaning a total extra wage bill of £432,000 a year.”
Mr Padgham added: “There is clearly a lack of understanding, at the very highest level of government, about how social care works.
“Most is provided by independent providers – businesses commissioned to deliver care packages by local authorities or Integrated Care Boards.
“Those commissioners have not been able to pay a realistic price for care for many years and that has pushed social care deeper and deeper into crisis, to the point where 2 million people now can’t get the care they need.
“If you pile more and more financial pressure on those providers without enabling commissioners to pay more for care, the result is inevitable – more leaving the sector and a further loss of provision.
“That will increase those who can’t get care and also scupper the Government’s plans to reform the NHS. It relies upon adequate provision of social care to meet its promises to move care from hospital to community and from sickness to prevention.
“I would urge ministers to visit social care providers to see for themselves the crisis at the coalface and how hard it is becoming to look after older, disabled and vulnerable adults.”
Struggling care providers – many small businesses – face paying huge NI and wage increases in April (Image: PA)
The majority of councils are set to increase rates by 5% from April – more than twice the current 2.3% level of inflation – in a move that would add £100 to the average family’s bill.
David Fothergill, Chair of the Local Government Association’s Community Wellbeing Board, said: “Councils are facing severe funding and demand pressures, meaning finances are under strain like never before. “With a vast majority of councils now struggling to balance the books, the costs from National Living Wage and employer National Insurance increases announced in the Budget must be fully-funded.
“At its best, adult social care supports adults of all ages to live the life they want to lead. But a range of serious concerns that councils have been raising for years remain and immediate adequate investment is needed in order to address unmet and under-met need and ensure timely access to social care for all who need it.”
The Department of Health and Social Care said: “This government inherited a social care system in crisis. We are determined to tackle the significant challenges and build a National Care Service so everybody can access the high-quality care they deserve.
“We have taken a critical step forward by introducing legislation that will establish the first ever Fair Pay Agreement for care professionals and we have increased the Carer’s Allowance earnings threshold by over £2,300, the biggest rise since the 1970s, giving unpaid carers the opportunity to earn more and care for their loved ones.
“On top of this, we have allocated at least £600 million of new funding for social care and £86 million for the Disabled Facilities Grant, which are part of a wider package to bolster support for councils.”