Findings published by The Care Provider Alliance (CPA) show the NI hike combined with the impact of National Living Wage rise could have devastating consequences with one in five warning they could be forced to close.

Professor Vic Rayner, chair of the CPA, said: ‘The Government must be under no illusion that the sector can absorb or accommodate these increased costs. Without adequate support, we now know for certain that services will close, care providers will stop delivering public services, and care workers will lose their jobs.'

Without immediate Government intervention the CPA said: 73% would refuse new local authority and NHS packages; 57% would hand back existing contracts to local authorities or the NHS; 77% would have to draw on reserves; 64% would have to make staff redundant; 92% would increase rates for self-funders; and 22% said they were planning to close their businesses entirely.

The findings follow Nuffield Trust research showing the sector faced a £2.8bn combined impact from the Budget and a warning from ADASS that many providers were endangered.

A Department of Health and Social Care spokesperson said: ‘This Government inherited a social care system in crisis. We are determined to tackle the significant challenges and build a National Care Service so everybody can access the high-quality care they deserve.

‘That's why we took difficult decisions in the Budget to fix the foundations to restore stability in our public services and we are providing councils with £1.3bn of new funding for 2025-26, including at least £600m for social care. 

‘On top of this, we have allocated an extra £86m for the Disabled Facilities Grant to bolster support for councils and those with social care needs.'