National insurance hike could be ‘catastrophic’ for social care, minister says

The rise in employers’ national insurance could be “catastrophic” for the social care sector in Scotland, MSPs have heard.

Social care minister Maree Todd said it was “inconceivable” that companies in the sector would be able to find the extra cash to pay for it.

Ms Todd suggested jobs could be lost in the industry due to the tax hike, which was confirmed during the Chancellor’s Budget last month.

On Monday, it was announced the Scottish Government will be given up to £330 million to compensate for the rise.

The cash – which ministers in Edinburgh say is not enough – will only cover public-sector workers.

Appearing before the Health, Social Care and Sport Committee on Tuesday, Ms Todd said the tax hike will cost the industry about £84 million a year.

She accused the UK Government of failing to take into account the effect the national insurance rise would have on social care in Scotland.

She told MSPs: “The impact on social care, I would go so far as to say it could be catastrophic.

“We think it’s a cost of around £84 million per year to the social care sector.

“Much of the social care is delivered by private companies and by not-for-profit companies.

“They have no way of increasing the amount of money that they take in.”

She said while most businesses could increase charges to services or products to offset tax rises, it would be “very difficult” for social care companies to do the same.

“It’s just inconceivable that they can find that extra money easily next year,” Ms Todd added.

The minister said it is not yet clear how the tax rise would “translate” into people “no longer working” in the sector.

She said that in areas like the Highlands, the social care system was already “precarious”.

“I am really anxious about the impact it may have,” she said.

Ms Todd appeared before the Holyrood committee to discuss the national care service proposal, which has now been paused.

The plan was suspended earlier this month after widespread opposition from trade unions, local authorities and MSPs.

The social care minister said the status quo could not go on and that change was urgently needed.

The legislation aims to centralise adult social care and social work – delivered by local authorities – into a single body ultimately accountable to ministers.

The shake-up was first announced in the aftermath of the Covid pandemic but since then the proposed service has suffered delays and uncertainty over costs.

Ms Todd said: “[People] are unhappy with the postcode lottery that they face at the moment, so that people in one part of the country have one type of social care system and access to certain services, and in another part of the country it’s completely different.”

The minister pointed to the disparity in delayed discharge in social care, with some areas experiencing waits 10 times higher than others.

The UK Government has been approached for comment.