Welsh care home group hit by £725,000 double whammy in “ruinous Budget”

Martin Shipton

A company with five care homes in south Wales has claimed that it’s facing a £725,000 double whammy as a result of controversial Budget measures.

According to Dr Bikram Choudhary, director of the SilverCrest Group which employs 420 people, the increase in the employers’ National Insurance contributions will cost them £300,000.

On top of that, the wage rises announced by the Chancellor will amount to a £425,000 bill for the company whose homes include Cwrt Enfys in Ystradgynlais, Tŷ Nant in Williamstown, Mill View in Ystrad, The Hollies in Pontypridd and Morgana Court in Bridgend.

Dr Choudhary is backing a new campaign by Care Forum Wales (CFW) calling for social care to receive an NHS-style exemption from the National Insurance increases or emergency financial support to stop care homes and domiciliary care companies going bust.

National Insurance contributions

He warned that increases in employers’ National Insurance contributions and a rise in the Real Living Wage could see care homes across Wales close.

And he said that would mean patients would needlessly be stuck in hospitals for months, while the social care sector itself would be at risk of collapse.

With a 1.2% rise in Employer National Insurance contributions and a cut to the Secondary Threshold to £5,000 alongside the 5% increase in the Real Living Wage to £12.60 per hour, bosses at CFW have calculated the sector in Wales faces a £150m funding hole to plug.

CFW chair Mario Kreft is leading the group’s new campaign, Save Social Care, Save the NHS.

He has outlined the organisation’s stark warning in a letter to Welsh MPs and MSs including First Minister Eluned Morgan and Health Minister Jeremy Miles. A similar letter has gone to Prime Minister Kier Starmer and Chancellor Rachel Reeves.

The campaign is being supported by the Five Nations Group, which represents care organisations from across the UK and Ireland.

‘Ruinous measures’

They all agree that third sector providers, including charities and hospices, will also be put at risk by the “ruinous measures” contained in the Budget.

Dr Choudhary said he shared those concerns and warned that the “funding hole” will have real consequences for patients who are fit enough to leave hospital, but can’t get a bed in the community.

He said: “I see the struggles from both sides, firstly as a provider of care and secondly as a GP, where we are trying to secure care for some of our patients but it’s just difficult to get social care support.

“Dementia patients or other patients with acute social care needs can suddenly find themselves in hospital for weeks or even months, through no fault of their own. They are often bounced around the social care system without receiving the appropriate care and treatment that they urgently need.

“This bed blocking adds extra pressure to hospital staff and the costs of this would be incredibly higher than if they were in a care home setting where they could be receiving specialist care.

“We desperately require more vital social care intervention to place patients in care homes which have the correct infrastructure to provide patients with proper care and enable a swift recovery.

“If the government really wants to fix the NHS by cutting waiting lists and preventing bed blocking then they have to realise that social care is the key element of achieving this and concentrate on fixing this first.

“I have seen a few care homes close their doors across Wales and this will be an added pressure on the care homes who still have their doors open.

“Over the years there has been a decline in hospital beds and unfortunately for the most part, especially in Wales, there has been a decline in social care beds.

“Throughout this time the population has not declined but has aged and faced greater ill health, yet there has been a reduction in beds. If the government doesn’t act now then the system is going to come under more pressure.”

Exemption 

According to Mr Kreft, the only way to avert the funding crisis is for the social care sector to be granted an NHS-style exemption from the increases in employers’ National Insurance contributions or failing that support to meet the other additional costs.

He said: “It represents a 37% increase in employer NIC for a member of staff earning £25,000 a year, which equates to the Real Living wage.

“If social care can’t be exempted, then the huge extra financial costs imposed as a result of the Budget must be paid for one way or another because this is a tax on publicly funded care.”

Dr Choudhary agreed and said: “Absolutely there needs to be some thought given to that. Care homes are very heavily staffed. There is no alternative at the moment. Myself along with other care providers fear there will be more closures because the extra costs will make them unsustainable.

“Without a shadow of doubt that is going to happen. Some of the smaller care homes are already really struggling to make ends meet, but it’s going to be a challenge for all care home providers.

“We at the SilverCrest Group have five care homes with 290 beds across south Wales, so we’re one of the top 10 largest care home providers in Wales but it’s going to be difficult for everyone.”

‘Change’

A UK Government spokesperson responded: “Last month we delivered a once in Parliament budget to wipe the slate clean and deliver change by investing to repair the NHS and rebuild Britain, while ensuring working people don’t face higher taxes in their payslips.

“Funding for health and social care is a responsibility devolved to the Welsh Government and the Chancellor announced in the Autumn Budget that it will be provided with a £21bn settlement in 2025/26 – the largest in real terms in the history of devolution.”

A UK Government source said: “The Welsh Government will receive additional funding on top of its record £21bn settlement announced in the Budget to support them with the costs associated with changes to Employer National Insurance Contributions. More details will be set out in due course.

“Our approach to NIC exemptions has been consistent with the approach taken by previous governments whereby the government will cover the cost of central government departments, public corporations and local government. This does not include support for the private sector, including private sector firms contracted out – with GPs, hospices and care homes generally operating as independent businesses.

“The UK Government has increased the Carer’s Allowance earnings threshold by over £2,300, giving unpaid carers the opportunity to earn more and care for their loved ones.

“This earnings limit will be £196 per week net earnings, compared to £151 now. Over 60,000 additional people will be able to receive Carer’s Allowance between 2025/26 and 2029/30 as a result. This is the largest ever increase in the earnings limit since Carer’s Allowance was introduced in 1976 and the highest percentage increase since 2001. We have launched a review into Carer’s Allowance overpayments to prevent people who devote such time and care to others from facing difficulties in the future.

“The Low Pay Commission’s remit explicitly asks them to consider the impact on business, the labour market and wider economy when making their recommendations for the National Living Wage.”