The Care Provider Alliance (CPA) of which VODG is a member, is sharing devastating findings from a comprehensive survey of over 1,180 care and support providers, revealing the social care sector faces potential collapse due to the combined impact of National Insurance changes and National Living Wage increases announced in the recent Budget.
This comes in the wake of independent research by the Nuffield Trust showing £2.8bn additional cost burden on care providers.
The survey, representing providers who care for hundreds of thousands of people across England, paints an alarming picture of a sector already stretched to breaking point now facing impossible choices. In the words of one provider:
"We have made it through a global pandemic and cost of living crisis only to be shut down by the very government that we hoped would save us. This is not just about business viability - it's about the lives of hundreds of thousands of vulnerable people who rely on these essential services."
Key findings show that without immediate government intervention:
- 73% will have to refuse new care packages from local authorities or the NHS
- 57% will hand back existing contracts to local authorities or the NHS
- 77% will have to draw on reserves
- 64% will have to make staff redundant (Nuffield Trust analysis)
- 92% of providers who also serve people who pay for their own care will be forced to increase rates for self-funders. Many self-funders will be unable to bear extra costs and may reduce care or rely more on family carers.
- 22% are planning to close their businesses entirely.
The survey reveals devastating impacts across all types of care provision:
Services for Working-Age Adults and Supported Living
Supported living and services for working-age adults face particular challenges. 708 providers support working-age adults across all settings. 71 providers deliver supported living services. Many report that funding pressures particularly impact complex needs support.
One supported living provider explained:
"The 105 people who we support would be forced into NHS care, or to other providers (if there are any left!) Some of their living arrangements would come to an end as we provide the properties for many of them to live in. Their continuity of care would be disrupted and would have significant impact on their wellbeing."
A provider supporting adults with learning disabilities explained:
"Our work supports learning disabled adults to become more independent and rely less on the state. If our services stop, all of these people will have limited lives and will become dependent on state funding - it's a false economy. Some service users may end up having to go to residential care if their parents don't have the respite of day services, this is way more expensive."
Homecare Services
The 479 homecare providers surveyed report multiple operational challenges. Providers estimate cost increases of 9-12%, which council and NHS commissioners say they cannot meet. In addition to the actions listed above:
- 42.9% will need to shorten care visits
- 38.2% are considering moving to unregulated care delivery models.
One provider warned:
"The majority of our clients are already battling to pay for their care. This additional cost, if passed on to them, will mean that they will not be able to afford as many care calls as they need, resulting in additional hospitalisation and ambulance call outs."
Another said:
"Overall budget measures cause a massive £7.9m increase on our staff costs including all workforce across our group of companies. Homecare alone sees an additional workforce cost of £2.8m. Homecare is on an already low existing margin of 4%, this move would take home care operation into a 4.8% loss."
A homecare provider in a rural area warned:
"Some of our service users are in remote farming areas several miles from the nearest village. It will be difficult for the people we care for to find alternative care providers."
Care Home Services
Care homes, representing the largest segment of respondents at 628 providers, report severe financial pressures:
- Many are already operating with minimal reserves
- 77.6% will reduce or stop planned maintenance
- 79.7% will halt capital investment.
One provider said:
"Initial calculations based on 6.7% pay rise and increased NI on current annual wages of £4.2 mil result in increase of £282k for pay increase and £174k for NI. Annual total = £456k (9.8% increase)".
Another care home operator reported:
"It is against every fibre of my soul that my residents and staff will be forced into uncertainty and that everything I have worked for to be so needlessly destroyed when there are other options that can be looked into, it's an absolute disgrace."
Workforce implications
The survey reveals severe implications for the care workforce. In addition to cutting jobs as highlighted above:
- 76% of providers will have to cut training and resources for staff
- 86% cannot maintain wage differentials, threatening career progression
- 64% will step back from paying the Real Living Wage
One provider noted:
"We have worked so hard to get our staff turnover down to 11%, so much lower than the sector average, and this could all be undone if pay isn't where it needs to be in April."
Investment and Innovation at Risk
The budget measures are forcing providers to abandon crucial investments:
- 71% are abandoning growth plans
- 75% will reduce or stop digital transformation projects
- 78% will cut service development initiatives
- 78% will halt environmental and de-carbonisation efforts.
Urgent Call for Action
The CPA is calling for the government to:
- Immediately exempt all care providers from the changes in employers' National Insurance contributions.
- Ensure the National Living Wage increases for all care staff are fully funded.
- Create a sustainable long-term funding settlement for social care.
Without immediate government intervention, the collapse of care services will leave vulnerable people without essential support and place unprecedented pressure on the NHS.