Ministers are under pressure to reimburse or exempt GP practices, charities and care homes from National Insurance increases, amid warnings it will cause job losses and cuts to services.
The rise in National Insurance (NIC) contributions has sparked post-Budget unrest among doctors and the voluntary and social care sectors, prompting calls from ministers for exemptions to prevent widespread cuts to provision.
Doctors have warned that the changes will lead to redundancies in cash-strapped GP practices. Voluntary sector leaders have written to the ChancellorRachel Reeves, calling on her to reimburse charities for a change they say will cost charities £1.4 billion.
Care England says the new charges and minimum wage increase will cost social care providers £2.4 billion – eating up the £600 million provided to the sector in the budget. It called for an “urgent review” of the budget.
Darren Jones, the principal secretary at the Treasury, stressed that organizations outside the public sector, including GPs, would not be exempt. “They will have to pay employer national insurance contributions in the same way as normal, and therefore at the higher rate,” he told BBC Breakfast.
Asked about warnings from care homes that changes will wipe out extra funding for the sector, he suggested further negotiations may take place in the future.
Jones said: “We will have to work through that with them as we are ultimately footing the bill for social care.”
On concerns about GP practices, a Downing Street spokesman said upcoming contract negotiations would determine funding levels.
BMA council chairman Philip Banfield said: “The rise in labor costs will put further pressure on GP practices. We need immediate reassurance from the government that it will provide additional funding to GP practices to cover these costs.”
Katie Bramall-Stainer, chair of the BMA’s GP committee, said she and Banfield had been passing on doctors’ red flags to health ministers since the budget. “We have clearly explained how concerned GP partners and practices will be about rising labor costs from April,” she posted on X.
Paul Stanley, practice manager at Gas House Lane Surgery in Morpeth, Northumberland, told BBC Radio 4’s Today program that the changes could cost his operation around £40,000 a year. “It’s a huge amount of money and our staff costs are, I would probably say, about 65-70% of all costs of the practice,” he said.
“I think what we’re looking at is an unfunded increase in our personnel costs, which could ultimately impact our resources and our workforce.”
GP practices will face redundancies, according to Dr Jess Harvey, a GP from Shropshire.
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“During these contract negotiations on our new contract, we are going to really struggle unless we get adequate compensation to cover this national insurance inflation,” she told Today.
Healthcare providers supported the call to exempt social care providers from the NI increase.
Independent Care Group chairman Mike Padgham said: “The government needs to do something and do it quickly as I am already hearing from healthcare providers that this could be the final straw for some of them.”
Geoff Butcher of the Blackadder Corporation, which owns a number of care homes in England, said he believed the rise in NICs for employers could force some homes to close.
“We will certainly not hire any additional staff. We will have to cut back on improvements,” he told Today.
In their joint letter to Reeves, the CEOs of the National Council for Voluntary Organizations and the Association of Chief Executives of Voluntary Organizations said: “The decision to expand the number of employer NICs – and not make an exception for them – will create a new great pressure on charities at a time when we are already having a hard time.
“The stark reality is that many organizations will be forced to reduce workforces, cut salaries and, most importantly, scale back services for the very people they are trying to support.”