Retirees and their families are facing significant care cost increases amid Labour’s Budget – London Business News | Londonlovesbusiness.com

Retirees in care and their families could face a significant rise in the cost of their care due to changes to increases in National Insurance (NIC) and National Minimum Wage (NMW) proposed in the budget, say leading audit, tax and business advisory firm, Blick Rothenberg.

Robert Salter, a Director at the firm, said: “Retirees who receive care and their families could be facing significant cost rises over the coming months because of Rachel Reeves Budget proposals.”

He added: “Not only has the headline rate of employer’s National Insurance (NIC) increased to 15%, but the starting point at which NIC is payable has fallen significantly too from £9,100 to £5,000. These changes, together with the increase in National Minimum Wage (NMW) to £12.21 mean that a care home with employees paid the NMW and working 40 hours per week would actually face a 16% increase in their staff costs from April 2025.”

Robert said: “As staff costs will be one of the biggest costs faced by any care home and as care requirements mean they have little opportunity to reduce their staffing levels, the reality is that the pensioners living in these homes and their families must prepare for a significant increase in the fees that they pay.”

He added: “Pensioners who are provided with private ‘at home’ care will not necessarily be able to avoid these costs either. As if their carers work for a care agency, that agency will still be faced with increased NIC and NMW costs, therefore have to raise their prices or reduce staff numbers.”

Robert said: “Self-employed carers may also raise their prices in response to the NMW increase, or due to the rise in NMW causing an increase in the cost of goods and services in some sectors.”

He added: “This could lead to families having to care for their loved one at home, or increase the hours of at home care they do themselves. In cases where that person has significant support needs due to conditions such as dementia, this can create a heavy financial and emotional cost for that family.”

Robert said: “Given Britain’s aging population and the requirement for more and more people to be provided with care and support in their old age, Rachel Reeves’s budget will realistically impact ever larger numbers of people over the coming years.”

Louise Southan, who pays a care agency to look after her parents with dementia, said: “If the cost of my parents care goes up, I will have no choice but to reduce the hours of care they get from the agency.

She added: “As they both have dementia, getting care allows them some level of independence by helping them with areas of daily life they struggle with. This means they can stay at home where they are comfortable.

Louise said: “There is only so much care I can give them myself. To increase the daily care my parents, get, I would have to work less hours, which is not financially viable for my family.

She added: “Any care cost rises would leave me between a rock and a hard place. I’d either have to risk my parents not getting the support they need, or risk my family’s financial stability to care for them.”