In opposition, the Labour Party spoke about transforming social care. Its manifesto promised a National Care Service and better employment conditions for care workers. Yet just a few months into Government, its actions tell a different story. One of either staggering ignorance about how social care works; or worse, a calculated move to destabilise the independent care sector to justify state control. Neither explanation inspires confidence.
The Chancellor’s Autumn Statement delivered a potentially fatal blow to care and support providers. Rt Hon Rachel Reeves MP announced two changes. An unfunded increase in employers’ National Insurance contributions (ENICs) from 13.8% to 15%, coupled with a reduction in the NICs threshold from £9,100 to £5,000; and a 6.7% rise in the National Minimum Wage (NMW). These measures present an existential threat to care services.
The changes will add c. £2.04 per hour to direct staff costs in homecare – a 9.9% increase that providers cannot absorb. This is before we consider inflation in other running costs. Unlike other businesses, most care providers cannot raise prices to cover their costs. Why? Because councils and NHS bodies buy 79% of homecare and 96% of supported living services. They dictate prices and are struggling with their own budgets. The Government appears either oblivious to or unconcerned by this fundamental dynamic.
Homecare Association research shows only 1% of public bodies are paying fee rates that cover costs. Councils say they must cut £1.4bn from their social care budgets in 2025/26. How does Labour expect providers to meet the increases? Secretary of State for Health and Social Care, Rt Hon Wes Streeting MP’s response to the sector’s concerns has been tepid. While acknowledging the pressures, he offers no concrete solutions, merely saying he is ‘alive to the concerns’. Care providers warn that community care services across Britain are at risk of failing.
The gap between Labour’s rhetoric and reality is stark. The Prime Minister speaks about his sister’s work as a care worker deserving ‘the same respect as the Prime Minister’. But his Government’s policies threaten to destroy the very sector she works in. Deputy Prime Minister Angela Rayner draws on her experience as a former homecare worker. Yet she supports policies that could leave care workers without jobs and thousands without care.
Labour has made the Employment Rights Bill a centrepiece of its policy agenda. Fair pay and improved employment conditions lie at the heart of this. Its principles are laudable. Ignoring the budget shortfall while promising better pay and benefits is, though, either recklessly naïve or politically cynical. Ministers cannot improve employment conditions whilst crippling providers’ ability to meet wage bills. The homecare sector alone needs an immediate cash injection of £1.9bn to cover increased costs. Yet no such funding appears forthcoming.
Unless Labour reforms the funding, commissioning and purchase of care, little will improve. Labour’s vision of a National Care Service remains vague, with Streeting admitting it could take ‘at least 10 years’ to implement. Meanwhile, Labour’s immediate actions risk decimating the existing care infrastructure. Consequences could be severe: more providers handing back contracts; increased unmet need; greater pressure on the NHS; increased burdens for unpaid carers; a greater risk of labour abuse; and a surge in unregulated care.
If Labour is serious about improving social care, it must act now. Exempt care providers from the NICs changes, provide emergency funding to cover increased employment costs and implement a national contract for care services that sets sustainable minimum prices. Without these urgent steps, Labour’s grand vision of a National Care Service risks having no functioning care sector left to build upon.
For more content discussing the impact of Labour’s Budget measures, read the latest feature from Gordon Cochrane, Chief Executive Officer at Healthcare Homes.
Dr Jane Townson OBE is Chief Executive Officer at the Homecare Association. Email: [email protected] X: @homecareassn