Leading communal charities have reacted angrily to the steep rise in employer national insurance contributions announced in the budget and joined calls for the government to exempt social care, public sector providers and charities.
Jewish Care CEO Daniel Carmel-Brown told Jewish News: “While we understand the huge demands on the Government, the latest rise in employer national insurance contributions will have a damaging impact on us, and all those who are part of the social care and charity sectors. It will add hundreds of thousands of pounds to the cost of employing our 1,300 dedicated, caring staff, with no balance elsewhere in the budget.
“We are disappointed that the Chancellor has not exempted social care, NHS, public sector providers, and charities from the rise in employer national insurance contributions. Without this, we will have no alternative but to raise the fees paid by self-funders and to push local authorities to increase their already limited contributions to people’s care costs.”
The United Synagogue also expressed concern about the failure of the government to provide an exemption for charities from the proposed rise in National Insurance contributions employers have to pay combined with the lowering of the threshold at which employee contributions begin.
The organisation said it employed more than 800 people across its communities, nurseries, cemeteries, kashrut and support departments but is now facing an additional tax bill of £500,000.
United Synagogue president Michael Goldstein (centre) with Mark Regev (right) and Jordanian ambassador Mazen Hamoud.
As a result of the employer national insurance rise – the biggest tax-raising measure announced by Reeves – the rate paid will rise from 13.8% to 15% and the threshold of employee earnings at which firms start paying the tax will decrease from £9,100 to £5,000 a year.
The chancellor said this would raise an additional £25bn a year by the end of the parliament, with an increase of 1.2 percentage points on the national insurance paid by employers.
Michael Goldstein, President of the United Synagogue, said: “Charities across the UK will be looking at their budgets today and working out how they can continue all the good work they do while absorbing these additional costs.
“The sad conclusion for many is likely to be that they can’t. It is incredibly unfair – and self-defeating – that the government, while seeking to bring more tax revenue to the Treasury from businesses, is treating charities in the same way as profit-making companies.
“The government must urgently grant an exemption for charities. Charities exist to support some of society’s most vulnerable people and plug the gaps left by government. If the government doesn’t reverse its decision, it is vulnerable people across the country who will inevitably pay the price.”
Meanwhile another leading communal charity Norwood reacted to Rachel Reeves budget on Wednesday saying “Whilst we’re cautiously optimistic about the pledged £600million investment into social care, Norwood remains concerned at the impact that the government’s budget announcements will have on us in the immediate term and our ability to continue to provide quality care for the people we support, while remaining a competitive employee in a sector that is increasingly struggling to recruit and retain its workforce.
“The budget announcements risk further tying our hands in already trying circumstances, presenting us with an additional £1m staffing bill we are forced to balance whilst pursuing a dynamic growth agenda designed to fill the gaps in local authority provision and government funding for families struggling to cope with neuro-diversity and neuro-developmental disability.
“We look forward to hearing further detail on how the government will deliver on its commitment to redress inequality of care and pay for charities such as ours.”
Darren Jones, Reeves’s deputy and chief secretary at the Treasury was questioned about calls to introduce exemptions on the employer NI rise, including from GPs.
But he told BBC Breakfast some GPs “may end up in a better position than they were in before” because of extra investment across the NHS.
Liberal Democrats leader Ed Davey also highlighted the impact on the care sector saying the budge” risks worsening the NHS crisis by hiking costs for care providers and pushing some to the brink.”
Jewish Care’s Carmel-Brown added: “Every government for the past 30 years, has promised and failed to deliver on committing to support the future of social care, and we continue to wait for a plan on this.
“At the same time, Jewish Care continues to see an increase in the need for the provision of care for older people, including those living with dementia, or who are at the end of life, and a rise in those living with mental illness, distress or trauma, who rely on Jami’s mental health service for the community.
“We urgently need to see cross-party political agreement on the social care crisis and to find a way forward to address this.”
On Thursday Health Secretary Wes Streeting acknowledged there were a number of healthcare providers that will be affected by the NI rise for employers.
Asked whether social care providers would be protected, he told the BBC’s World at One programme: “I’m working through that now and I’ll have more to say on that in the coming weeks in terms of what we can do more quickly to deliver the shift I’ve wanted to see for some time, in the focus of NHS investment spending out of hospitals into primary community.”
He also pointed to the extra £600m allocated to social care in the Budget.But social care sector leaders said the £600m risks being swallowed up by wage and employer tax increases, leaving little or nothing to address spending pressures, sector leaders have warned.
The chancellor announced that councils would receive at least an extra £600m in grant funding for social care in 2025-26.
This was part of a wider grant package worth £1.3bn which, along with other revenue increases, would give local government a real-terms rise in resource of about 3.2% next year.
Care England, which represents independent adult care providers, similarly warned that providers were already underfunded and that the £600m – which it presumed would also cover children’s services – was a “drop in the ocean”.
“We needed a bold step forward, a signal that adult social care matters to the fabric of our society,” said Care England chief executive Martin Green.
The Office of Budget Responsibility (OBR), which provides independent fiscal oversight, has said it assumes companies will “pass on most but not all of their higher tax costs to employees”. In 2025-26 it estimates 60% of these costs will be passed on to workers and consumers via lower wages and higher prices.
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