Reeves has one month to save health and social care from £16bn “jobs tax bombshell”

EMBARGO: 00.01 Thursday 6th March

• Lib Dems call for health and social care sector to be exempted from National Insurance tax hike at Spring Statement
• Health and care providers including dentists, GPs and care homes facing £3 billion tax hike next year, or £15.7bn over five years

The Liberal Democrats have warned Rachel Reeves that she has just one month to save the health and care sector from a £16 billion tax bombshell over the next five years.

The party said that the Chancellor should use the Spring Statement to announce she is exempting the sector from the impending tax rise before it comes into force on April 6th.

Analysis by the Liberal Democrats shows the health and social care sector is facing an estimated £3 billion bill next year due to the national insurance tax hike, rising to £3.3 billion a year by the end of the decade. It means health and care providers are expected to fork out an additional £15.7 billion in Employer’s National Insurance contributions over the next five years.

The worst affected region will be London, with a hit of roughly £2.2 billion over the next five years. This was followed by the South East with an estimated hit of around £2.1 billion and the North West with nearly £1.8 billion.

The Government has previously announced that it will cover the rise in the Employer’s National Insurance for the NHS but ministers have not committed to covering the cost of the jobs tax for other health and care providers such as care homes, GPs or dentists.

Just a few weeks ago thousands of protesters descended on Westminster demanding action on social care including a scrapping of the national insurance hike for care providers. The chair of the National Care Association, Nadra Ahmed said that increased costs had not kept pace with funding levels and warned some care providers could end up bankrupt. One care home provider, Applewood Support, said that their costs will rise by an estimated £6,000 a month once the national insurance rise comes into force. 

Liberal Democrat Health and Social Care spokesperson, Helen Morgan MP said:

“Rachel Reeves has just one month to save health and social care from this jobs tax bombshell. Ever since the Chancellor’s failed Budget we have heard from countless healthcare providers horrified that next month's tax hike will leave vulnerable people without the care they need. 

“Social care is on its knees, wait times for GPs are still through the roof, and dental deserts seemingly span the length of the country, yet ministers now risk only prolonging this misery with these increased costs.

“This is just the tip of the iceberg. Ministers cannot allow their pride to get in the way of accepting what is right: they must listen to the calls of those providing vital community health and care services who are calling on them to scrap this jobs tax.

“Rachel Reeves must announce this at the Spring Statement in just a few weeks or risk care providers and those who rely on them being thrown to the wolves on April 6th.”

ENDS

Notes to Editors:

Analysis by the Liberal Democrats can be found here.

The research used the latest available ONS data on aggregate pay by region and industry to estimate the effect of the National Insurance increase on health and social care in different regions of the UK. [ONS: Earnings and employment from Pay As You Earn Real Time Information, seasonally adjusted]

Data refers to the “health and social work” sector, which includes among others hospital activities, general medical practice, dental practice activities and residential care activities.

The comments from the social care sector are reported here.

Prior research by the Lib Dems found that councils are already paying a staggering £53,352 a year in nursing costs per pensioner, up more than £24,000 on 2015/16’s level of £29,276 a year - an 82% jump with costs only expected to rise further due to this tax hike can be found here.

Reporting on councils spending up to 80% of their budgets on social care costs can be found here.

Previous Liberal Democrat research on the cost to GPs due to the national insurance hike can be found here.

Previous Liberal Democrat research on the number of month long waits for a GP appointment can be found here.

The vote on the Liberal Democrat amendment in the House of Lords to exempt health and social care from the rise in national insurance can be found here.