Having set out their key concerns about the impact of the Autumn Budget on social care last month, Kent County Council (KCC) and the Kent Integrated Care Alliance (KiCA) have jointly written to Minister of State for Care, Stephen Kinnock, to again urge a Government re-think to support the sector's stability.
18 December 2024
Dear Minister of State for Care,
Re: Implications of the Autumn Budget 2024 on the social care system
We acknowledge that the Government recognises the challenges facing the local authority adult social care system in general, and care providers in particular. However, the situation is deeply concerning because of the planned changes to employer National Insurance contributions due to take effect in April 2025, and the effect that this will have on the adult social care system.
Kent County Council (KCC) and the Kent Integrated Care Alliance (KiCA), which represents local care providers, urge the Government to take action to fully fund the additional costs arising from the changes to employer National Insurance contributions and further increases in National Living and National Minimum wages, to help support the sector’s stability.
"The social care system, now faces an existential risk due to the mandated wage cost pressures set to take effect from April 2025"
Adult social care has lacked a sustainable funding base, in terms of the quantum and certainty for considerable time and we fear that unless fully addressed, the financial pressures brought about by the Autumn Budget could severely compromise the stability and sustainability of social care services. The social care system, now faces an existential risk due to the mandated wage cost pressures set to take effect from April 2025.
In England, local authorities purchase about 70% of care delivered by independent and voluntary social care providers. Whilst there are no robust estimates for the additional cost to employers for those staff providing care for local authority clients, there is plenty of speculation that increasing fees to fully cover these costs would be substantially more than the additional funding available for social care. This means the overall impact of the Autumn Budget would eclipse both the £680 million extra funding allocated to social care (for both children and adults) and changes to council tax rates (the 2% adult social care levy would raise approx. £640m for English councils). This represents a net loss for adult social care. This extra funding for adult social care (together 2 with pro rata share of other general funding sources) needs to cover all spending pressures within the sector including increased demand both from aging population and increased client complexity, and increased costs from new client placement/provision of alternative care packages where providers exit the market. Indeed, according to the Office for Budget Responsibility's analysis, “the extra funding allocated to social care in the Budget will be cancelled out by the new tax rises.” Kent County Council has a forecast savings requirement of just under £50 million in its Adult Social Care budget for 2025/26.
We are writing to you because we are also concerned that, while NHS employers will receive compensation for the increased National Insurance contributions, there is no declared commitment to similarly support social care. We believe that this discrepancy undermines the shared aim of aligning support for both health and social care, as emphasised in the Darzi report.
Our reasons for urging government to redress the additional costs arising from the Autumn Budget 2024 are these:
- National Living Wage: this is set to rise by 6.7% to £12.21, with rates for younger workers increasing by 16.3% to £10 and for apprentices by 15.2% to £8.60
- Employer National Insurance (NI) Contributions: Increasing by 1.2%, with a lowered threshold to £5,000
- Provider closures: Rising wage costs may force some providers out of the market, creating further strain on local authorities and the NHS which must be avoided
- Workforce attrition: The many providers currently paying above the National Living Wage (NLW) may be compelled to revert to the new NLW, leading to attrition as workers seek higher-paying roles elsewhere. Such workforce losses could exacerbate pressures on the NHS, increasing A&E attendance and delaying hospital discharges
- Poor outcomes for people who draw on care and support and increased NHS Pressure: Disruptions in care services will inevitably impact vulnerable people, placing additional strain on local healthcare systems and almost certainly increased length of stay in hospital due to delayed discharges.
We are committed to working with government on its broader social care system reform to achieving transformation of the adult social care sector, and, to making a difference every day to support people to live as independently as possible in their own homes, including people who need to go to hospital. We look forward to your support in addressing these urgent pressing matters.
Thank you for your attention and consideration.
Yours sincerely,
