Increased employer NICs on charities will wipe out some essential services for older people
National charity Age UK has revealed that the Government’s Budget measures will cost its local Age UKs £6.27 million this year and it is calling for more financial help so that it can continue to provide vital support to older people in need.
Some essential Age UK services which help highly vulnerable older people, and their families and unpaid carers, will be forced to scale down or close as a result of the Government’s decision to increase Employer NICs (from 13.8% to 15% in April 2025) and to lower the salary threshold at which they become due.
This is the stark conclusion of Age UK’s new report ‘Nothing Left to Trim’ which sets out the findings of its recent survey of local Age UKs and national local partners.
Age UK received 69 responses to its survey giving a creditable response rate of more than 50 per cent. Through their replies many made it clear that as a result of their increased costs brought about by the Budget, they will have to let go some staff; increase the charges levied on older people who pay for their own services; and ultimately close some services, if they can no longer see how to make them viable, given their increased cost base. For a few, their survival as local charities was also at risk.
The 69 local Age UKsi which responded to Age UK’s survey said that the increase in their costs brought about by the Budget would cost an extra £6.27m annually. Seven in 10 respondents indicated that these changes will decrease their ability to deliver services to older people and mean that they would need to consider reductions in staffing.
Five in 10 said they are now having to consider cutting services or handing back contracts to the NHS body or their local council that commissioned them, because they are no longer able to afford to deliver them on the terms agreed before the Budget was announced.
The Government’s decision to increase Employer NICs and lower the salary threshold at which these start to be paid inevitably hits employers of relatively large numbers of low paid staff particularly hard. Unfortunately, this is a good definition of the situation in many charities, Age UK states, meaning that the charity sector as a whole is being seriously impacted by the changes.
Age UK is also worried that if local Age UK’s are forced to raise the prices for some of their services then they could become unaffordable for older people in need who are living on modest incomes. In these circumstances there is a risk that some older people simply stop using a service, like help at home, and become less able to live independently as a result.
Against this challenging backdrop the charity is calling for more financial help to be made available to local charities of all kinds so they can continue to provide vital support – in the case of local Age UKs to older people and their families and unpaid carers.
It suggest that this financial help could be provided directly (e.g. via an exemption for local charities from the Employer NICs changes); or indirectly, for example through additional dedicated funding made available to councils in the final local government finance settlement.
Age UK argues that its local Age UKs provide vital and life-enhancing services to older people, including social care and home help type support; discharge support for older people leaving hospital; help claiming benefit entitlements; befriending services to combat loneliness; social activities; exercise classes; and free information and advice.
These local charities support many thousands of older people and their families each year, helping them to stay well and independent for as long as possible, usually in their own homes. As a result, they save money for both the NHS and local councils, by preventing or delaying older people’s need for formal health and social care services.
In addition, while Age UK supports the Government’s decision to increase the National Living Wage to help low paid staff, it states that this is another cost that local Age UKs must now meet at the same time as weathering the changes to Employer NICs. The combination of all these increased charges coming together is simply too much for some local charities, whose resilience has already been weakened by the events of recent years.
Despite these challenges, local Age UKs, and charities more generally, remain strongly committed to their beneficiaries and communities. However, this unwavering commitment has stretched their resources thin and has brought some close to or beyond collapse – several local Age UKs were forced to close for financial reasons during 2024.
Age UK is calling for the Government to make more financial help available to local charities so that they can continue to provide vital support within their communities. It wants this financial help to be provided directly via an exemption from the Employer NICs changes for local charities. It suggests that this could be provided indirectly, through additional dedicated funding made available to councils in the Final Local Government Financial Settlement, to be announced soon.
Paul Farmer CBE, Chief Executive of Age UK said: “At a time when the Government is saying it wants to work more closely with charities, and when the public demand for our services is higher than it has ever been before, it’s deeply frustrating that the changes to Employer NICs in the Budget are undermining our ability to support vulnerable older people and their families and communities.
“If we were truly acting in response to the needs we see we would be opening many more services, especially in areas with high levels of deprivation and demand. Instead, the reality is that many local Age UKs are worried about sustaining their existing provision, and are planning to retrench and, in some cases, close altogether forms of help that are highly valued by the older people who use them.
“As one local Age UK leader said to me recently, ‘we only just survived the pandemic, then the cost of living crisis, so it’s terrible to be hit by this surge in costs now, just when we thought there was light at the end of the tunnel and brighter times lay ahead.’”
“The Government has provided extra funding to local councils, and to the NHS, in recognition of the impact of the changes to Employer NICs, but it has so far chosen not to compensate charities that work closely with them to deliver vital services, in the same way.
“Of course, we understand that the public finances are under severe stress, but it seems utterly self-defeating to allow effective voluntary sector run services to wither and die, when they contribute so much to achieving the Government’s NHS and social care goals, among others. And make no mistake, once a local charity closes there’s no quick or easy coming back.”
“That’s why we sincerely hope that Ministers will look at reports like this one about the – no doubt unintended – consequences of its Budget changes to Employer NICs for the viability of local charities and take action to help organisations and services to survive.”