Changes to employer National Insurance Contributions could force many social care providers to close, new analysis has warned.

Nuffield Trust research shows the move could cost adult social care over £900m next year and together with planed increases to the National Minimum Wage would represent additional costs of £2.8bn.

Natasha Curry, deputy director of policy at the Nuffield Trust, said: ‘Already fragile after a decade of cuts, runaway inflation and the effects of Covid-19, adult social care was in desperate need of relief. But this was a Budget that gave with one hand and took away with the other. The Government rightly wants to reform social care, but with the real prospect of swathes of the social care market collapsing under these extra cost pressures, there may be little left of it to reform unless the Government takes urgent action to cover ENICs for adult social care providers.'

With local authorities purchasing around 70% of care delivered by independent social care providers, councils would need to find an extra £2bn in fees to offset these higher costs, the trust said, taking up the £600m extra funding allocated to social care (for both children and adults) at the Budget and the effects of an increased local government grant and changes to council tax rates (expected to yield around £2bn in total).

Cllr David Fothergill, chair of the LGA's Community Wellbeing Board, said: ‘Councils are facing severe funding and demand pressures, meaning finances are under strain like never before. With a vast majority of councils now struggling to balance the books, the costs from National Living Wage and employer National Insurance increases announced in the Budget must be fully funded.

‘At its best, adult social care supports adults of all ages to live the life they want to lead. But a range of serious concerns that councils have been raising for years remain and immediate adequate investment is needed in order to address unmet and under-met need and ensure timely access to social care for all who need it.'

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.'