The Homecare Association expresses deep concern as MPs reject social care exemption from national insurance hike

Today's House of Commons decision to reject amendments exempting social care providers from the upcoming increase to Employers' National Insurance Contributions (ENICS) profoundly disappoints the Homecare Association.

Despite a significant show of support in the House of Lords, where peers previously voted 305 to 175 in favour of protecting the social care sector, MPs have now overturned these amendments during the parliamentary process.

From April 2025, social care providers will face a 10% cost increase, worsening the existing £8.4 billion funding gap. The Office for Budget Responsibility (OBR) estimates these changes will cost providers £800 per employee, though industry analysis suggests the actual impact could be substantially higher, exceeding OBR projections by over £1 billion.

Many councils have not yet communicated their fee rates for 2025/26 to providers. Offers already made show an average increase of only 5%. Some local authorities have offered no increase at all. In 2024/25, only 1% of public sector contracts pay enough to meet employment and care regulations and allow delivery of safe, sustainable homecare services. Over 85% of homecare providers are SMEs operating on wafer-thin margins. They cannot absorb a 10% increase in costs with 0% to 5% increases in fee rates. As a result, older and disabled people risk losing care services, adding burdens to families, and increasing pressure on an overwhelmed NHS.

Dr Jane Townson OBE, CEO of the Homecare Association, said:

"Today we bear witness to a devastating blow that seals the fate of thousands of care providers across our nation. In a callous act of indifference, the government has dismantled the core principles and ethos of the Care Act, abandoning millions who depend on vital support. This is indeed a dark day for community based care, not only a ruthless assault on those we protect and employ, but on the very fabric of our democracy.

“The government's refusal to exempt care providers from the ENICs increases, while simultaneously failing to provide adequate funding to local authorities, threatens the existence of regulated homecare services across Britain. The government is forcing homecare providers to choose between breaching regulations or insolvency.

"Our sector already faces a £1.8 billion funding deficit in homecare alone. With only 1% of councils currently able to pay sustainable rates, many providers will now find it impossible to maintain quality services while meeting their statutory obligations.

"The government speaks of 'home first' policies and improving care workers' conditions, but their actions today reveal a fundamental disconnect between rhetoric and reality. Without immediate intervention through the Local Government Finance settlement, we risk widespread service disruption, with devastating consequences for older and disabled people who rely on these essential services."

The Homecare Association wants immediate action to fix adult social care, not just a commission which reports in 2028.

We urge the government to make an immediate increase to funding for local authorities so they can increase fees to cover costs. Without this, it will be hard to improve employment conditions as the government intends.

To improve outcomes for people, we need a major change in the funding commissioning, regulation and provision of homecare. We look forward to supporting the Casey Commission to explore options for the future.

ENDS

Notes to editors 

1. The Homecare Association is the UK’s membership body for homecare providers, with over 2,200 members nationally. Our mission is to ensure that homecare receives the investment it deserves, so all of us can live well at home and flourish within our communities. The Homecare Association acts as a trusted voice, taking a lead in shaping homecare, in collaboration with partners across the care sector. It also provides hands-on support and practical tools for its members. The Homecare Association’s members agree to abide by the Association’s Code of Practice.
2. House of Lords vote to exempt social care from Employers National Insurance Hike. Lords vote to exempt social care from NICs hike | Local Government Chronicle (LGC).
3. Employment costs, representing 70-80% of providers' total costs, will surge by at least 10% in 2025-26. This is driven by increases in employers' national insurance contributions and minimum wage requirements. We provide detailed analysis in our Minimum Price for Homecare 2025-26 report.
4. The Office for Budget Responsibility Economic and fiscal outlook (EFO) sets out a central forecast and the uncertainties that surround it for the five years to 2029-30, taking account of recent data and government policies announced up to and including the October 2024 Budget. Economic and fiscal outlook – October 2024 - Office for Budget Responsibility
5. The fee rates local authorities and the NHS pay now are too low to cover costs (Homecare Association). Only 1% meet our Minimum Price for Homecare of £28.53 per hour in 2024-25. This will rise to £32.14 per hour in 2025-2026, as detailed in our new Minimum Price for Homecare report.