'I'm worried care homes will have to close'

An organisation that represents care providers in Shropshire is worried care homes will close when employers start paying more tax from April.

David Crosby, chief executive of Partners in Care, wants the government to exempt care workers from a rise in employer National Insurance contributions (ENICs).

Shropshire Council has also raised concern, claiming the additional financial burdens on businesses "could have a devastating effect on care organisations".

Chancellor Rachel Reeves said the rise in ENICs announced in October's Budget was "difficult", but the right choice in order to fund public services.

Partners in Care currently represents more than 250 care providers in Shropshire, Telford and Wrekin.

"Overnight in April, care providers, as well as other sectors, will get a 10% increase in their staff costs," said Mr Crosby.

"They can't afford to pay that unless the fee rate from local authorities is increased," Mr Crosby continued.

"I think we'll see businesses closing, care homes shutting and home care providers ceasing to exist. It's going to be absolutely massive."

At the moment businesses pay a rate of 13.8% on employees' earnings above a threshold of £9,100 a year.

In the Budget the chancellor said this rate would increase to 15% in April 2025, and the threshold would be reduced to £5,000.

The employment allowance - which allows companies to reduce their NI liability - will increase from £5,000 to £10,500.Around 77% of the county council's budget is spent on adult and children's social care, much of which is outsourced to the private sector.

The council is warning that higher staffing costs will increase the fees it has to pay care providers and therefore put further strain on its already stretched finances.

Authority leaders have said the county is disproportionately affected by an older, rural population, which makes providing care more expensive.

Debbie Price is chief executive of Coverage Care Services, which runs 11 care homes across Shropshire.

The not-for-profit organisation employs around 1,100 people and provides care for more than 700 residents.

"Changes to National Insurance contributions alone will cost my company £800,000 next year," she said.

"Seventy percent of social care comes through local authorities and we're not being paid what it costs to provide the service we're providing," Ms Price said.

"Shropshire Council needs to pay more money, but the council can only do that if it receives more money from the government."

On Wednesday, the government announced a 6% increase in local government funding for 2025/26, including £515m of additional funding to support councils with the increase in ENICs.

The Local Government Association, which represents councils in England and Wales, welcomed the funding, but said it falls short of the £1.75bn it will cost councils and commissioned providers next year.

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