Source · Select Committees · Housing, Communities and Local Government Committee
Recommendation 7
7
Acknowledged
We do not accept the Government’s position that care providers should not be compensated for...
Conclusion
We do not accept the Government’s position that care providers should not be compensated for employer National Insurance Contributions in relation to the Health and Social Care Levy simply because they are, on the whole, private businesses. We heard again and again that there should be parity of esteem between the NHS and social care. Compensating the “health” component of the “Health and Social Care Levy” because it is a public sector employer while not doing so for the “social care” component only serves to reinforce the strongly felt notion that social care is the poor relation of the NHS. It also introduces unfairness between public and private care providers. The additional cost to private providers will make it harder for them to increase wages. This may lead to more care workers leaving the sector, many for jobs in the NHS. Furthermore, it is a perverse logic that care providers should have to undergo further financial strain by paying a tax that is supposed to be helping to relieve their financial strain. Since the Health and Social Care Levy is supposed to benefit both health and social care, private care providers should be compensated for employer National Insurance Contributions to the Health and Social Care Levy. (Paragraph 41) Changing reforms
Government response summary AI-generated
In light of the new timeline to implement charging reform, the government will be reviewing the delivery plan and considering how to ensure that insights from Trailblazers can be effectively fed back into the development of delivery to refine or adapt our approach to implementation.
Summary of the government's response below — read the verbatim text to verify.
Government Response
Acknowledged
HM Government · verbatim extract
Acknowledged
At the 2021 Spending Review, the government made the decision to fund departments and other public sector employers to cover the increased cost of National Insurance Contributions (NICs), as a result of the Health and Social Care Levy (HSCL). Whether an organisation received funding for the increased cost of NICs depended on its classification. Employees who were employed by the public sector were included, but not, for example, where services were contracted out. Any other approach would have resulted in differential treatment between private and public sector employers. The September 2022 announcement repealing the 1.25% increase in NICs from 6 November means that employers are no longer faced with the additional pressure of employer NICs, and their budgets have been adjusted to remove this compensation. This means we are revising the additional grant funding for councils, announced as part of the 2021 Spending Review by approximately £200 million in each of 2023–24 and 2024–25. There will be no change to budgets in 2022–23, as funding has already been allocated. The 2023–24 Local Government Finance Settlement (LGFS) provides an increase in Core Spending Power for local authorities of around 9%, making available almost £5 billion in additional funding.
Read the full response on Parliament ↗