Care Providers Express Concern Over Potential Closures Due to Upcoming Tax Increases

An organization representing care providers in Shropshire has voiced apprehension that care homes may cease operations when employers begin paying increased taxes from April. David Crosby, chief executive of Partners in Care, is advocating for the government to exempt care workers from the impending rise in employer National Insurance contributions (ENICs). Shropshire Council has also raised concerns, asserting that the additional financial burdens on businesses “could have a devastating effect on care organisations.” Chancellor Rachel Reeves previously stated that the increase in ENICs, announced in October’s Budget, was “difficult” but a necessary decision to fund public services. Partners in Care currently represents more than 250 care providers across Shropshire, Telford, and Wrekin. “Overnight in April, care providers, as well as other sectors, will get a 10% increase in their staff costs,” Mr Crosby explained. Mr Crosby further elaborated, “They can’t afford to pay that unless the fee rate from local authorities is increased.” He predicted, “I think we’ll see businesses closing, care homes shutting and home care providers ceasing to exist. It’s going to be absolutely massive.” Currently, businesses pay a rate of 13.8% on employees’ earnings that exceed an annual threshold of £9,100. The Budget outlined that this rate will increase to 15% in April 2025, and the threshold will be reduced to £5,000. The employment allowance, which permits companies to reduce their National Insurance liability, is set to increase from £5,000 to £10,500. Approximately 77% of the county council’s budget is allocated to adult and children’s social care, with a substantial portion outsourced to the private sector. The council is warning that elevated staffing costs will lead to higher fees payable to care providers, thereby placing additional strain on its already stretched finances. Authority leaders have indicated that the county is disproportionately impacted by an older, rural population, which contributes to the higher expense of providing care. Debbie Price is the chief executive of Coverage Care Services, an organization that manages 11 care homes throughout Shropshire. This not-for-profit organization employs around 1,100 individuals and provides care for more than 700 residents. She stated, “Changes to National Insurance contributions alone will cost my company £800,000 next year.” Ms Price added, “Seventy percent of social care comes through local authorities and we’re not being paid what it costs to provide the service we’re providing.” She continued, “Shropshire Council needs to pay more money, but the council can only do that if it receives more money from the government.” On Wednesday, the government announced a 6% increase in local government funding for the 2025/26 fiscal year, including an additional £515m specifically to support councils with the increase in ENICs. The Local Government Association, which represents councils in England and Wales, welcomed the funding but noted it falls short of the estimated £1.75bn cost to councils and commissioned providers in the coming year.