Budget is £150m triple whammy for social care in Wales and poses greater threat than Covid

Social care in Wales could collapse as a result of a £150 million triple whammy in the “ruinous” Budget, an organisation representing care homes and independent care providers has warned.

Care Forum Wales (CFW) says the controversial measures announced by Chancellor Rachel Reeves pose a “greater threat than Covid” to the sector and fears care homes and domiciliary care companies will inevitably be forced to close.

The only way to avert the impending crisis, according to CFW chair Mario Kreft MBE, was for the social care sector to be granted an NHS-style exemption from the increases to employers’ National Insurance contributions as well as support to meet the other additional costs.

Funding hole

With a 1.2% rise in Employer National Insurance contributions and a cut to the Secondary Threshold to £5,000 alongside the five per cent increase in the Real Living Wage to £12.60, CFW has calculated the sector in Wales faces a £150 million funding hole to plug. In North Wales that amounts to a gap of £40 million.

CFW revealed that 40 care homes in Wales had already been forced to close since the onset of the Covid pandemic, at least four of them in North Wales with a combined loss of 163 beds.

Even before the Budget, specialist business property adviser Christie & Co Wales faced a 10,000 deficit in the number of care home beds Wales needs over the next decade.

It comes at a time when demand is spiralling upwards, with the over 85 population set to double over the next 20 years.

The sector in Wales, said Mr Kreft, was made up mainly of smaller, community based care homes and nursing homes and were typically family-run businesses.

Exemption

He said: “Without an exemption from these additional and potentially ruinous costs -whether that comes from the UK Government or extra funding from the Welsh Government – many care homes and nursing homes and home care companies face a real existential threat.

“These measures will see average size care homes facing extra costs of tens of thousands of pounds, with larger care providers facing even heftier bills amounting to hundreds of thousands.

“The social care sector already has large wage costs compared to other industries because of the number of workers it needed.

“To put it into context, a typical residential home where people don’t need nursing has a wage bill as a proportion to turnover of about 60 per cent. That rises in nursing homes to 65 per and more.

“For domiciliary care the percentage of wages to turnover is over 80 per cent.

“So when you look at the context of those figures and add it to what we have seen in the Budget, it’s a triple whammy.

“In Wales we won the argument that was insufficient and the Welsh Government through their guidance to local authorities and health boards have provided funds for the Real Living Wage to be paid which is currently £12 an hour outside London and is going up to £12.60, a five per cent increase.

“So most of the people in our care homes, our care workers, are going to get a five per cent increase in their pay packet while others will eligible for 6.7 per cent increase in the National Living Wages.

“But the point is, that is a massive and significant cost on the wage bill.

“And when you add the National Insurance rise, this all amounts to a massive extra cost on the wages bill.

“On top of all of that we have the new measures around inheritance tax which is going to be a major threat to the future security of these family businesses which like the farmers are going to find it difficult if not impossible in many cases to pass them down the generations.

“Added to that there are realistic fears that this will accelerate the haemorrhage of staff from social care to the NHS.

Reassurances

He added: “One way or another, we need to have prompt reassurances that the sector will be reimbursed for these extra costs.

“The social care sector is essentially a support service for the NHS and should be given the same exemption from having to pay the extra NI employers’ contribution while the increased costs of the Real Living Wage should be funded by the extra £1.7 billion coming to Wales from the chancellor’s Budget.

“Basically, if you don’t fix social care, you will never fix the NHS, it’s as simple as that.

“Social care is a very cheap way of enabling the NHS, which is a very expensive thing, to run

“These care homes are businesses but they are also vital community assets which are fantastic value for money which enable people to remain in their own community.

“The Welsh Government’s forward thinking policy of Let’s Agree to Agree dictates that the actual costs of providing social care should be met to the sector is financially viable.

“We came out of Covid with 40 fewer care homes and we will potentially lose even more as a result of this ruinous Budget unless the sector gets the supports in deserves and needs.”

Fears

Mr Kreft’s fears over the impact the Budget will have on the social care sector without more funding were echoed by Anglesey care home director Kim Ombler.

She owns Glan Rhos Care Home at Brynsiencyn with her sister Helen and brother David.

The home has 52 beds and the family have been running the business for 35 years.

They have calculated that the Budget is going to cost Glan Rhos an extra £127,000 a year.

Kim Ombler believes the sector could collapse without additional support to ensure its survival.

She said: “We are incredibly worried about changes in the Budget on the crucial services we provide.

“We care for 52 residents and want to be able to continue to recruit staff and continue providing the best quality care. The Budget makes this extremely difficult.”