Services will close, Mencap warns over national insurance rise

A major charity supporting people with learning disabilities says it may be forced to close at least 60 of its services as a result of rising national insurance costs.

Mencap is one of a growing number of care organizations warning they may have to close vital services due to the budget impact.

Businesses – including charities – currently pay a 13.8% National Insurance rate on employees’ earnings over £9,100 a year. But this will rise to 15% in April 2025 instead when wages reach £5,000.

Mencap says the increase will cost £5.3 million a year.

The Government also announced a rise in the national minimum wage during the Budget – with the hourly rate set to go up to £12.21 an hour for those over the age of 21. It said it would cost the charity an additional £6.7 million.

Combined with other workers’ wages increasing as a result of the minimum wage increase, the charity estimates that these changes will cost up to £18 million per year.

Local authorities, who pay for the majority of social care for elderly and disabled people, say rising costs for the sector are “insurmountable”.

The government says it is tackling the challenges facing adult social care, while also providing extra money as part of £3.5 billion in extra funding for councils in England next year.

Twenty-six people with a variety of learning disabilities live in Churchfields, Essex. It is one of 600 services operated by Mencap in England, Wales and Northern Ireland.

Mencap says that although Churchfields is not at risk, contracts to provide other similar services could be terminated.

Among the residents of Churchfields are Barry and Betty. Both use wheelchairs and require round-the-clock assistance. Betty can speak a few words, but Barry cannot. He often relies on sign language to communicate and yes/no answers to questions written on a white board.

But with both, their faces and reactions can tell their story more clearly than words can.

Their faces light up when they see each other. Betty lifts Barry’s hand to kiss and they both smile. An engagement ring shines on Betty’s left hand – the staff helped Barry propose to her.

Tito Adegbenro, one of Barry’s care workers, is passionate about his work.

“The quality of life you give these people is their life experience,” he says.

Churchfields requires 50 staff to help people live fulfilling lives. Maincap employs approximately 7,500 staff across all its services. Many care workers are low paid.

The October Budget increased the National Minimum Wage (NMW) – a move that was expected and welcomed by those running care services in a sector where recruitment is difficult.

However, care organizations say the changes to National Insurance Contributions (NICs) will have a big impact – particularly on social care, where many people work part-time and were previously below the threshold for paying tax.

Mencap says the NIC increase will add at least £615 to the annual cost of employing each staff member.

When this is combined with the increase in the minimum wage, charities will need to find an extra £12m each year.

But if the charity increases everyone’s pay to maintain a pay gap that reflects level of experience and responsibility, it says the annual additional cost could rise to £18 million.

John Sparks, chief executive of Mencap, told the BBC it may have to close at least 60 services.

“They are services that provide basic daily social care, support to 200 people with learning disabilities, and services that employ around 400 people,” he says. “These are the services I’m most immediately concerned about.”

He warned: “It could be even higher.”

Local authorities pay charities to support people with learning disabilities, so in practice this would hand contracts back to councils.

Mr Sparks says that unless fees are increased substantially, he will have to tell councils that “we are not able to safely run this service on the funding we are receiving”.

Similar concerns are widespread in adult social care services. A new report commissioned by care unions and written by health and care analyst Langbuisson says 80-85% of social care in England is provided by small, local organisations, which have little financial flexibility.

Dr Jane Townson of the Homecare Association, which represents providers supporting people in their homes, is concerned there is a real risk of a “significant reduction in care and support services”.

They fear this will leave some people without essential services and increase pressure on families and the NHS.

“We are at a tipping point and we need immediate government intervention,” she says.

Most social care in England is funded by councils. Care providers estimate that to cover the increased costs of the national minimum wage and NIC fees for their services will need to increase by 9-10% next year.

But local authorities are also under immense financial pressure. Melanie Williams, chair of the Association of Directors of Adult Social Services (ADASS), represents the people who run council social care.

She says local authorities are already struggling financially, facing inflationary costs and increasing demand from people who need more complex care.

“The costs are too high,” she says. “Many of us spend too much on adult social services. It feels like we’re in an impossible situation.”

ADAS has calculated that an additional £1.8 billion is needed for care services in England “just to keep up”.

The government says ensuring a stable economy is one of the foundations of the plan to “deliver stability, growth and investment for communities across the UK”.

It said it was tackling the challenges facing social care with a number of measures, including improving staff pay and increasing financial support for families with caring responsibilities: “We are tackling the challenges facing adult social care. “We are tackling the challenges and taking the first steps towards building a national care service.”

The spokesperson said: “We are giving local authorities an extra £3.5bn over 2025-26, including a £680m increase in social care funding to support the sector.”