Concern mounts over financial impact of National Insurance changes on housing associations providing care and support

Concern is growing in the housing association sector about the impact of the Autumn Budget’s National Insurance changes, particularly on organisations providing care and support.

Employer NI contributions will go up to 15% from April 2025, while the threshold at which they start paying contributions will be lowered to £5,000.

The latter looks set to have a particularly large impact on associations that provide care services, as care staff are typically on lower wages and will brought under the new, lower threshold for the first time.

The change, unless mitigated by the government, is estimated to lead to charges of £800 to £900 per employee per year, which could equate to millions in extra costs for larger care providers.

A spokesperson for Housing 21, the retirement living provider said: “The increase in Employer National Insurance and the reduction in threshold at which it is payable, combined with the increase in National Living Wage, will present particular challenges for providers of social care.”

They added that the additional £600m in the budget for local authorities to spend on adult social care “is welcome, but is probably only enough to keep the current social care system afloat.”

“To avoid already financially-stretched services from being pushed into deficit it is vital this funding is passed on in full to adult social care providers”.

Mike Padgham, chair of the Independent Care Group, which represents social care providers, told the BBC that the sector had been “left out in the cold”.

“We now employ collectively, more than the NHS - 1.7 million people. So those extra charges are going to hit charities and private sector providers alike when we’ve been squeezed by local authorities who are themselves short of cash.

James Tickell, partner at Campbell Tickell, said that several housing associations offering care services have contacted him to raise concerns about the financial implications of the changes.

It is understood some larger organisations are expecting to pay more than five million pounds in additional contributions due to the threshold reduction.

Employers’ national insurance contributions will also rise by 1.2 percentage points to 15% from April 2025. The government also increased the national living wage by 6.7% to £12.21 an hour, representing an increase of £1,400 to the annual earnings of a full-time worker.

Tickell said that “early indications are that the lowering of the salary threshold from £9,100 to £5,000 will have a bigger impact than the wider increase”.

He also pointed out that contractor costs will also rise. He added “these are material sums, which will unavoidably impact on services to tenants, pay levels and investment in new and existing homes”.

For associations that have not yet committed to pay rises for 2025/26, some are understood to be weighing up the option of offering smaller pay increases next year.

Health secretary Wes Streeting was asked whether social care providers would be protected from the changes.

Speaking on the BBC’s World at One programme, he said: ”I’m working through that now and I’ll have more to say on that in the coming weeks in terms of what we can do more quickly to deliver the shift I’ve wanted to see for some time, in the focus of NHS investment spending out of hospitals into primary community.”