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Mencap warns National Insurance rise could force closure of care services

December 11, 2024

Mencap, one of Britain’s leading charities supporting people with learning disabilities, has warned it may have to close at least 60 of its services due to mounting cost pressures following changes announced in the Budget.

The organisation says the rise in employers’ National Insurance contributions (NICs), combined with a sharp increase in the national minimum wage, will add up to £18 million a year to its annual costs. The charity’s chief executive, Jon Sparkes, cautioned that frontline care services could become unviable without higher fees from local authorities, which are responsible for commissioning most adult social care.

Currently, employers pay NICs at 13.8% on earnings above £9,100, but under the new rules the rate will increase to 15% from April 2025 and start from £5,000. At the same time, the national minimum wage will rise to £12.21 an hour for over-21s. Mencap says these measures will affect every one of its roughly 7,500 staff, including many low-paid care workers, leading to a £12 million annual hit. If the charity also raises pay for other workers to preserve pay differentials, the total could reach £18 million.

Mencap supports around 600 services across England, Wales, and Northern Ireland. While some sites—like Churchfields in Essex, where 26 people with complex learning disabilities live—are not immediately at risk, Sparkes warns that at least 60 services may have to close unless the charity receives “substantial” increases in funding from councils. He expressed concern that “basic daily social care” for some of society’s most vulnerable people could be lost.

These concerns are echoed widely across the sector. Analysis by health and care consultancy LaingBuisson, commissioned by care associations, found that 80-85% of social care is provided by small local organisations with little financial resilience. With higher wage and NIC costs, care providers fear a “significant reduction in care and support services,” according to Dr Jane Townson of the Homecare Association.

Local authorities, who face their own funding challenges, say that to cover the increased costs, they would need to raise provider fees by 9-10%. Melanie Williams, president of the Association of Directors of Adult Social Services (ADASS), argues that councils are already struggling with overspends and rising demand, calling the mounting pressures “insurmountable.”

ADASS estimates that an extra £1.8 billion is needed just to maintain current care services in England. While the government insists it is taking steps to stabilise and improve the sector—including increasing council funding by £3.5 billion in 2025-26—it acknowledges that it must tackle longstanding challenges in adult social care.

A government spokesperson said it is committed to supporting adult social care through improved staff pay and broader measures, noting: “We are giving local authorities an additional £3.5bn in 2025-26… to support the sector.” Yet for charities like Mencap, already operating on tight margins, the question remains whether this support will arrive in time to prevent the closure of services that provide essential, life-enhancing care.