In announcing the Autumn Budget this week, Chancellor Rachel Reeves made much of its focus on increased public spending, but very little of the extra revenue from increased taxation will go towards funding social care.
Yes, there is an allocation of £600 million in new grant funding for social care, shared across both adult and children’s services, but this is a derisory amount when compared with £22.6 billion for the NHS, £11.2 billion for education and £1.8 billion for childcare.
Instead, social care has been clobbered with a 6.7% increase in the National Living Wage and a 1.2% increase in Employer National Insurance contributions, with the threshold for paying that being lowered from £9.1k to £5k.
Care provider representative body Care England says the government’s neglect to fund adult social care in the autumn statement will put the social care sector in unprecedented danger, with a likely increase in the number of contracts handed back to local authorities by providers, closure of services that are no longer viable, and the inability for some care providers to sustain or move towards paying the real living wage.
The National Care Forum, which represents not-for-profit care providers, is no less gloomy in its response to the Budget:
“Adult social care providers will be hit particularly hard by the government’s planned changes to employers’ National Insurance contributions,” said the NCF chief executive Vic Rayner. “Unless fully funded, these increases alongside the welcome raising of the National Living Wage will combine to apply an enormous financial strain and also undermine their ability to focus on the real need to improve care workers’ pay, terms and conditions.
“It seems clear that this Budget will not even provide the desperately needed stabilisation that every report, inquiry and select committee has demanded. Neither, unfortunately, does it reassure that this a government committed to ensuring social care is understood, prioritised and invested in as a public service that changes people's lives.”
The human cost of the government’s lack of regard for social care will be borne by thousands of frail elderly and other already vulnerable people as levels of unmet need continue to escalate across the nation.
The Autumn Budget will pose an existential threat to many care providers big and small.
However, an increasing number of them have found that the impact of these increasing cost pressures can be offset by recovering VAT paid on operating costs in respect of publicly funded clients. Over the past 10 years, corporate restructuring for VAT recovery has become established practice in the care sector and is undertaken with HMRC approvals in place.
For those providers of elderly and specialist care whose client base has a significant proportion of publicly funded clients, contract restructuring is a proven route to bolstering business viability.
For more than 15 years, Kieran Lynch & Co have been supporting care providers through VAT recovery. Over that period managing director Jock Waugh and his team have returned more than £100 million in net benefits to the sector. Kieran Lynch’s expertise is on the restructuring of welfare services to allow care providers the opportunity to improve their trading positions by being VAT efficient.
Thinking about restructuring for VAT recovery? Get in touch via our website or call Jock Waugh of Kieran Lynch on 0114 262 2127.
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