Disability charities expect rises in employer NICs & minimum wages to mean £266mn shortfall in 2025
Melanie May | 16 December 2024 | News
The rise in employer NICs and minimum wages will result in an estimated £266million shortfall for disability charities next year, according to a Voluntary Organisations Disability Group survey.
The Voluntary Organisations Disability Group (VODG) commissioned Cordis Bright to survey its members and found that more than 60% of the 130+ respondents expect to be in financial deficit as early as March 2025. A third believe they may be forced to hand back statutory contracts to local government, including residential care services and support provided in people’s homes.
Organisations expect to have to mitigate soaring wage bills by making redundancies, cutting hours or implementing a pay freeze for existing staff. Almost a quarter of respondents (24%) say staff cuts are inevitable, with 18% considering a pay freeze or reduction in the hourly rate of pay for its staff.
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Dr Rhidian Hughes, Chief Executive, Voluntary Organisations Disability Group commented:
“The recent Budget announcements on increased employer national insurance contributions and national living wage present significant challenges for disability services. Third sector providers of frontline services have faced years of under-funding, and these changes are set to push charities to the brink.
“The government has pledged £680m for social care in its latest budget but the amount needed across the sector is closer to £2.8bn. Without an exemption, or protected funding to cover the commitments being introduced by government, it will mean that services for disabled people will at best shrink, and at worse close. Without this action, the rights and legal entitlements of disabled people to care and support will be pulled away. Public sector commissioners are in no place to be able to pick up and run these services and the question we are left with is who will then support disabled people with life-long conditions?”
John Heritage, Chief Executive of David Lewis, which provides support, care and education for people with a learning disability, epilepsy, autism and complex support needs, said that while they welcomed the increase in the national living wage, this and the increase in the national insurance contributions for employers would add £1mn to their running costs, adding:
“This is before we even consider adding in wider inflationary pressures we continue to experience. This huge cost increase will mean providers like ours will have to make even tougher choices about the services we provide and if we can continue to provide some of these services as well as if we are able to invest in existing services and our fantastic teams in their pay going forward.
“We deliver statutory services that are commissioned by local authorities. How can the public sector be exempt from the NIC rise for employers but statutory services commissioned by the public sector, with public sector funding aren’t? It’s illogical. The people who will be impacted are the most vulnerable people in our society – people with a disability and the fantastic staff teams who support them. It’s time for a clear plan from the Treasury and the Department for Health and Social Care on how these currently unfunded costs will be met.”
The Chancellor ruled out any exemption or reimbursement for charities at the end of November, in response to letter from NCVO and ACEVO, and co-signed by more than 7,300 charities and voluntary organisations.
Employer NICs are set to rise in April from 13.7% to 15% – a change that will cost the sector an estimated £1.4bn.
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About Melanie May
Melanie May is a journalist and copywriter specialising in writing both for and about the charity and marketing services sectors since 2001. She can be reached via thepurplepim.com.