Chancellor's tax hike risks care sector closures

Chancellor Rachel Reeves is facing strong criticism for her decision to increase National Insurance contributions for employers. Critics warn this tax hike could put care homes out of business and raise the cost of care services. Shadow Chancellor Mel Stride described the tax increase as “devastating” and “madness.” He expressed concerns that it could lead to higher inflation and unemployment. Stride highlighted that families seeking care for loved ones may encounter fewer options and rising expenses. The National Care Association warned that about a quarter of care services could be at risk of closure due to the tax changes. Additionally, the Nuffield Trust estimated that the increase could cost the adult social care sector over £900 million. Mike Padgham of Saint Cecilia's Care Group noted that many care providers may not survive these financial pressures. He mentioned that the government’s decisions make it harder to give staff the pay raises they need and could limit plans to improve care homes. Nadra Ahmed from the National Care Association expressed concern about recruitment in the care sector. She said the tax increase would have a “critically impacted” effect on this issue, creating an uncertain future for those dependent on care services. As Chancellor Reeves prepares for her Spring Statement, she faces an uphill battle. Government borrowing exceeded expectations in February, reaching £10.7 billion. Stride criticized Reeves, claiming her tax decisions are reasons for the economy's struggles. Looking ahead, Stride believes Reeves will have to make painful decisions to manage the financial situation. He stressed the need for thoughtful reforms in welfare spending to achieve lasting savings. The government has yet to respond to these concerns.