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On 25 November, the Chancellor delivered his latest Autumn Statement. In a year which has already seen two Budgets – which have both brought big changes to the care sector (particularly with the introduction of the National Living Wage, which is likely to have a significant impact) – operators were perhaps understandably tentative about what this year’s Autumn Statement might bring.

In this article we summarise the key points arising from the Autumn Statement and focus specifically on what the changes may mean for the care sector.

In summary (general):

  • Tax credit cuts scrapped all together
  • £12bn in targeted welfare savings to be delivered in full
  • Small business rate relief to be extended for one more year
  • NHS to receive £10bn more funding a year in real terms by 2020
  • Basic state pension will rise by £3.35 to £119.30 a week
  • New 3% surcharge on stamp duty for buy-to-let properties and second homes from April 2016
  • Doubling of housing budget to £2bn a year
  • Capital funding of transport projects to rise by 50%
  • Increased devolution with 26 new or expanded Enterprise Zones announced
  • Transport (37%), environment (15%) and energy (22%) departments all face funding cuts 

Read our in-depth Autumn Statement 2015 key details and summary

 

Autumn Statement 2015

In summary (care home specific):

 

  • No acceleration in the introduction of the National Living Wage
  • Local authorities allowed to increase council tax by 2% to fund social care
  • Local government central grant to be cut by more than a half
  • NHS to receive £10bn more funding a year in real terms by 2020
  • The Better Care Fund will also be increased
  • Axing of grants for tuition fees for student nurses
  • State pension to rise by £3.35 per week
  • Small businesses to be ‘exempt’ from apprenticeships levy

Autumn Statement care home impact


Where next for the care sector?

Scott Sanderson, Healthcare Partner at Hawsons, commented: “A recent report, by ResPublica report (which is backed by the GMB trade union) indicated that the care sector will have a shortfall in funding of £1.1bn by 2020/21. This year’s Autumn Statement was on opportunity for the government to address the looming funding crisis and provide the support that the care sector so desperately needs. But George Osborne failed to deliver the additional funding, which leaves the care sector in a state of uncertainty. Care homes have been hit hard by dwindling local authority funding for residents in recent years and forthcoming additional costs are piling on the financial pressure.”

“The introduction of the new National Living Wage in the summer Budget was a devastating blow that will see wage costs (the largest cost facing care home operators) rise significantly. The increase in staffing costs, in conjunction with rising energy costs, is potentially crippling the industry. The devolution of powers to give every council in England the opportunity to increase council tax by 2% to fund social care is welcome, but would only raise a maximum £500m a year (£2bn by 2020) so is not enough on its own for many operators to remain viable.”

“The introduction of the new apprenticeships levy will also impact the biggest care home operators. Care home groups with a paybill in excess of £3m will contribute to the funding, so only those with more than 250 employees across the group are likely to be impacted.”

Care England’s chief executive Martin Green, said: “I would like to see George Osborne mirror the £3bn that he has given to the NHS, and to put this money directly into social care. It is important that George Osborne finds a way to get this money directly to care providers. We needed £3bn and we have got less than £0.5bn. Not every authority will raise the council tax by two% and even if they did, that only raises £0.5bn and the BCF has not been spent on independent care services, so this will not help at all.”


Other issues

Two other announcements which will impact the care sector are the basic state pension rising next year by £3.35 to £119.30 a week and the replacement of grants for student nurses with loans.

Ahead of the Statement there were also suggestions that the introduction of the new National Living Wage could be accelerated, but that was not the case.

Scott added: “Some good news that came for care home operators was that the new National Living Wage’s timetable would not be accelerated. The sector was caught unawares in the Summer Budget when the announcement was made and any bringing forward of the new rates would have been unwelcome.”


For more information

More from our care sector experts

You can also find all of our latest care sector news and newsletters here.

If you are looking for advice in a particular area, please get in touch with your usual Hawsons contact.

Alternatively, we offer all new clients a free initial meeting to have a discussion about their own personal circumstances – find out more or book your free initial meeting here. We have offices in Sheffield, Doncaster and Northampton.

Scott Sanderson began his career with Hawsons and trained as a Chartered Accountant, becoming a partner in 2015, specialising in the healthcare sector and small businesses. For more details and advice, please contact Scott on s[email protected] or 0114 266 7141.

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