A Sheffield councillor has revealed the negative impact the rise of employers’ contributions tax will have on health and social care providers, and the local government.
Liberal Democrat councillor, Sophie Thornton, said that the Labour government has “given with one hand and taken with the other” when she proposed the motion, ‘A Fair Deal for Social Care Providers’, at a Sheffield City Council meeting this week.
The proposal highlighted the impact the rise of National Insurance employees’ contributions tax (NICs), introduced by the budget, will have on the health and social care sector.
It also emphasised the effect on the quality of care that users will receive, as well as the financial consequences for the local government.
The council meeting explained that employers, from April 2025, will start paying NICs on employee’s earnings from £5000 instead of the current £9,100.
Personal care provider at Prof- Care Sheffield, George Granger, said: “This increase will be very hard for our staff and clients. We now may be limited to the national living wage.”
Mr Granger added that their “hands are tied” as Prof-Care will face a big struggle to provide Personal Protective Equipment (PPE) and sufficient transport for their clients.
Cllr Robert Reiss, who backed Cllr Thornton’s motion, said: “Increased costs will impact employees through lower salaries in the long term and a reduction in staff numbers.”
He added: “Adult social care is a statutory function of the council and it needs to be provided.
“It is one of the largest costs to the council, for whom budgets are already stretched, and increasing the costs to social care providers will exacerbate this further.”
Analysis provided by the Nuffield trust, a UK organisation aiming to improve the health and social care sector through research and policy analysis, shows that 70% of care provided by adult social carers is paid for by local authorities.
Cyril Lobont, Researcher at the Nuffield Trust, said: “Lower income area adult social care providers will be hit the hardest by the 1.2% rise in NICs.”
Mr Lobont added that changes to employer NICs will cost the adult social care sector more than £900m next year, which Cllr Thornton said is £300m more than what has been allocated to local governments to support local care.
