National insurance is to be increased to create a £2 billion shortfall for care homes

The Treasury should exempt social care from the planned rise in national insurance premiums or risk creating a £2 billion ‘black hole’ in the sector, the boss of a leading trade body has warned.

Prof. Martin Green, head of Care England, said budget plans to increase employer contributions from 13.8 to 15 percent risked putting social care in ‘financial jeopardy’.

Liberal Democrat leader Ed Davey said last week that as the “vast majority” of Britain’s social care providers are privately owned, they would be hit hard by the tax rise, while they would not benefit from additional funding earmarked for the NHS and public sector healthcare groups.

Green backed Davey’s claim to exempt the sector, and also called on ministers to rethink lowering the threshold at which employers pay National Insurance on workers’ salaries. From April 2025, this amount will drop from £9,100 per year to £5,000.

He said the plans, which would see a 6.7 per cent rise in the National Living Wage, would create ‘a £2 billion financial black hole for healthcare providers to plug’.

“With local authorities already funding the majority of social services,” he said, “the government has put them, and the sector itself, at financial risk.”

The tax increase will save the Treasury £25 billion a year.