LEADING CHARITIES WARN NI DECISION WILL HAVE CATASTROPHIC CONSEQUENCES FOR DISABILITY SERVICES IN THE UK
- Service cuts inevitable in 2025 as charities unable to afford NI increases
- Charities poised to hand back contracts as services become unsustainable
- Immediate investment needed to secure social care for next generation of disabled people
- Urgent calls for Government to include ‘third sector’ organisations in public sector exemptions
The Voluntary Organisations Disability Group (VODG) - the membership body representing over 100 organisations within the voluntary sector - predicts increased costs of employing approximately 85,000 staff currently working for its members, will lead to inevitable service cuts and life-changing consequences for many of the million disabled people currently accessing services unless the cost burden is fully funded.
Rhidian Hughes, VODG Chief Executive, says: ‘The government’s national insurance decision will have catastrophic consequences for state funded disability services.
‘Whilst the commitment to raise National Living Wage and improve workers’ rights are of course welcome. The fact that plans around NI and wage increases remain unfunded for charities, disregards the significant pressures already facing third sector providers of publicly commissioned care and support.
‘Charities cannot afford to shoulder this additional burden with some of our members already reporting they are poised to hand back contracts next year as they become unsustainable.
‘Third sector providers exist for public benefit. Government can either choose to include these organisations in the same reimbursement arrangements as other public sector bodies, or government needs to fix the problem it has created and fund charities to cover the uplifts.
‘The £600million grant increase for social care will be spread far too thinly across local authorities to make any meaningful difference in supporting the basic costs of third sector providers. This, coupled with a higher-than-expected increase to the National Minimum Wage, will leave many charities in the UK unable to balance the books and forced to cut, or cancel vital services altogether.
‘VODG member organisations play a vital role in supporting more than a million disabled adults and children to live full independent lives. The bleak picture of financial pressures is causing many members already at breaking point, to review services in order to foot the new tax bills:
- A charity supporting people with deafblindness, predicts the NI changes will increase its operating costs by at least £2million a year and jeopardise placements for many disabled people who have lived in their residential settings their whole lives
- A small charity providing vital social care support in England and Wales already spends 83% of its expenditure on staff costs, meaning the substantial increase in its wages bill will need to be balanced by service cuts, ultimately meaning the people who reply on its services will feel the most impact
- A social enterprise supporting people with learning disabilities, young people leaving care and people with dementia, has calculated the reduction in the NI threshold equates to a £615 per person increase in staff costs across its 700 strong team. Coupled with the rise in employer NI contributions the charity is facing a £1.5m shortfall if it receives no uplift in fees
- A Trust which supports adults with learning disabilities in West Sussex has reported it is already handing back contracts to the local authority as it can no longer financially sustain them.
‘This is just a snapshot of how disability charities are being impacted by the recent budget,’ says Rhidian. ‘Following a post-budget poll and feedback from our members, it is clear that the consequence of Labour’s NI policy on charities is ill thought through.
‘The Government needs to engage with the third sector immediately to address financial stability from April 2025 as we look to the local government finance settlement and beyond. Social care is designed to protect the most vulnerable members of our community, and this Labour government is letting them down.’