VODG Release | Cordis Bright Report on the Budget 2024

• 1 in 3 disability charities poised to hand back local government contracts
• A quarter considering redundancies due to soaring staff costs
• Over 60 per cent expecting a financial deficit by March 2025
• Charity exemptions needed to secure the rights of disabled people

Following the Government’s autumn budget, independent analysis by Cordis Bright commissioned by the Voluntary Organisations Disability Group (VODG) has found a third of its members may be forced to hand back statutory contracts to local government - including residential care services and support provided in people’s homes - due to increases in Employer National Insurance Contributions (NICs) and minimum wage rates.  

The survey of disability charities by VODG and Cordis Bright found the increased cost of NICs and wages will result in an estimated £266million shortfall next year, with over 60 per cent of disability charities surveyed expecting to be in financial deficit as early as March 2025.  

Many of the organisations polled will be forced to mitigate soaring wage bills by making redundancies, cutting hours or implementing a pay freeze for existing staff unless the government takes urgent action to fully fund or exempt charities from this cost burden.  Almost a quarter of respondents (24%) believe staff cuts are inevitable, with 18 per cent reluctantly considering a pay freeze or reduction in the hourly rate of pay for its staff.

Dr Rhidian Hughes, Chief Executive, Voluntary Organisations Disability Group which commissioned the research, says: ‘The recent Budget announcements on increased employer national insurance contributions and national living wage present significant challenges for disability services. Third sector providers of frontline services have faced years of under-funding, and these changes are set to push charities to the brink.

‘The government has pledged £680m for social care in its latest budget but the amount needed across the sector is closer to £2.8bn. Without an exemption, or protected funding to cover the commitments being introduced by government, it will mean that services for disabled people will at best shrink, and at worse close. Without this action, the rights and legal entitlements of disabled people to care and support will be pulled away. Public sector commissioners are in no place to be able to pick up and run these services and the question we are left with is who will then support disabled people with life-long conditions?’

Cordis Bright, a consultancy and research firm specialising in children and young people's services and adult social care, undertook the analysis of the impact of the budget on over 130 charities providing disability services across the UK.

Tom Noon, Chairman of Cordis Bright, says: ‘There is often a myth that not-for-profit organisations can somehow find ‘other sources’ of funding. In reality the disability charities we heard from are providing a public service funded by the state.  This is not a lucrative activity and many years of below inflation increases in funding have pushed these organisations to the limit of sustainability.

‘Local authorities derive significant benefit from the willingness of not-for-profit organisations to contribute to the costs of what some might describe as ‘extras’ but others would see as integral to good quality provision. Disability charities will not be able to continue to fund this type of additional input if the organisation is losing money.’

Lisa Hopkins, CEO at SeeAbility, which supports people who have learning disabilities or autism, who may also have sight loss, adds: ‘As a charity we employ close to 1000 staff, so you can imagine the financial impact this National Insurance change will have. As providers we cannot absorb these costs and as a result disabled people will go without support, with devastating consequences. We cannot let this happen. Social care is not a problem, an inconvenience, or a financial drain. It provides a brilliant opportunity to support people to have ambitious lives.  It is a lifeline for so many people, now we need the government to throw people with disabilities a financial lifeline, rethink, and realise the true value and cost of social care.’

John Heritage, Chief Executive of David Lewis, a provider of support, care and education for people with a learning disability, epilepsy, autism and complex support needs based in Cheshire and working across the UK, says: ‘The increase in the national insurance contributions for employers and the increase in the national living wage, which we welcome, will add £1m per year to our running costs.  This is before we even consider adding in wider inflationary pressures we continue to experience.  This huge cost increase will mean providers like ours will have to make even tougher choices about the services we provide and if we can continue to provide some of these services as well as if we are able to invest in existing services and our fantastic teams in their pay going forward.   

‘We deliver statutory services that are commissioned by local authorities. How can the public sector be exempt from the NIC rise for employers but statutory services commissioned by the public sector, with public sector funding aren’t?  It’s illogical.  The people who will be impacted are the most vulnerable people in our society – people with a disability and the fantastic staff teams who support them.   It’s time for a clear plan from the Treasury and the Department for Health and Social Care on how these currently unfunded costs will be met.’  

Dave and Paula, Merseyside, parents of Emily who is supported at David Lewis shared: ‘David Lewis is a fabulous charity providing great support for our daughter.  We know the charity has got ambitions to do even more to support people like Emily who have complex support needs.   How is it supposed to do this, being hit with a £1m unplanned rise in its costs every year with no one explaining how this huge cost is going to be funded?   

‘For too long social care has been underfunded. This rise in National Insurance costs for employers like David Lewis will make what is already a very challenging situation with funding even worse and will probably impact on what they can provide unless the Government or local councils step up and cover these costs in full.   It is something that is a big worry for parents like us and we need to see action.’   

Chris Hampson, Chief Executive of Look Ahead, an organisation providing care, support and housing for people with learning disabilities, young people, people with mental health needs and those experiencing homelessness said:“Care and support providers nationwide are deeply concerned about the Government’s current course on employers’ National Insurance rises. These changes will add significant costs for social care providers who are already operating on extremely tight margins to deliver vital services for people with a range of needs including disabilities, physical and mental health needs as well as for those who rely on crucial support following adverse life experiences, such as rough sleeping, trauma and domestic abuse.”

Tyler, a former Look Ahead customer said: ‘Without the vital support that Look Ahead provided me, I would have ended up as a 17-year-old on the streets of London. Look Ahead stopped that from becoming reality and helped support me to recovery, which allowed me to go onto doing things like getting a job and going to university. It is vital these services stay open, and I implore you to reconsider your decision for people like myself.’

Dr. Rhidian Hughes, concludes: ‘‘In the next few months many local authorities will be finalising their proposed funding settlements with providers.  Increasingly it is looking as if the level of uplift in funding will fall well short of the resources that are needed to ensure that the organisations providing the services do not lose money.  Disability charities do not want to hand contracts back to local authorities but equally they cannot take on the financial consequences of services which are not adequately funded.

‘The government is seeking to stabilise the social care sector in advance of moving forward towards a National Care Service.  Unfortunately, the results of this survey show that these unfunded and substantial increases in costs will have precisely the reverse effect. Given the fragile state of the social care sector both private and not-for-profit, it is hard to see how this will not compound challenges already prevalent within the system.’

 -ENDS-

Notes to editor

• VODG (Voluntary Organisations Disability Group) is a national charity that brings together leading not-for-profit organisations who provide services to disabled people in ways that promote independence, choice and control.
• Our overarching aim is to ensure that VODG members, working in partnership with commissioners, people who use services and their families can provide progressive, high quality and sustainable services that uphold rights and meet the requirements of disabled people.
• Cordis Bright  provides research, evaluation, advice and consultancy aimed at improving public services. We work with providers and commissioners to improve outcomes for people who need care and support and their families.
• The Nuffield Trust has estimated increases, the Budget impact on social care to be an estimated £2.8bn in the next financial year.