“OBR figures suggest that the increase in NICs will cost more to social care providers than the money that the government has announced for that sector in the budget.”@libdemdaisy has implored the government to protect health and care providers from the NIC hike. pic.twitter.com/ywt7qWuZK1
— Liberal Democrats (@LibDems) November 20, 2024
The text of the exchange is below:
May I associate myself and the Liberal Democrats with the Deputy Prime Minister’s remarks on Ukraine?
Ahead of the Budget, I warned the Deputy Prime Minister that increasing national insurance contributions on social care providers would make the crisis in social care worse. Now, OBR figures suggest that the increase in NICs will cost more to social care providers than the money the Government have announced for that sector in the Budget, with that measure alone withdrawing £200 million from the sector. Will the Deputy Prime Minister speak with the Chancellor to ensure that, at the very least, health and care providers are protected from taking the hit?
The Deputy Prime Minister
I thank the hon. Member for that question. The Chancellor is sat near me, and I know that, through our discussions, we wanted to ensure that social care was protected. That is why we confirmed £600 million of new grant funding for social care next year, an uplift to local government spending and an £86 million increase to the disabled facilities grant. Our Employment Rights Bill will help deliver the first ever fair pay agreement for the social care sector as well, and we will also ensure that the NHS is funded to help with the social care situation.Daisy Cooper
It is clear that social care providers will be worse off, so I urge the Deputy Prime Minister and the Chancellor to look again at that.Somebody else who was worried about the Budget is Cathy, a farmer in my constituency, who told me yesterday that she thinks the Government changes simply do not make sense. They mean that her family may have to pay a bill that will force them to sell land, which makes food production unviable. At the same time, the Government have not closed the land-buying tax loophole that can be exploited by equity firms and the super-wealthy. Farmers told me yesterday that they feel as though they have been betrayed by the Conservatives, but they now feel that they have also been lied to by Labour. Will the Deputy Prime Minister think again on this measure, so that our farmers can feed Britain?
The Deputy Prime Minister
Again, I am sorry to hear that Cathy is distressed by the scaremongering around what the Labour party is doing. The Budget delivered £5 billion for farming over the next two years—a record amount. The last Government failed to spend £300 million on farmers. Our plan is sensible, fair and proportionate, and protects the smaller estates while fixing public services that they rely on.
There was just one more question from a Liberal Democrat today – Helen Morgan got in right at the end to ask a question on waiting times after a constituent told her about their heartbreaking situation:
Shropshire has the worst record in the country for CT and MRI scan results.
This is one of many examples of failure to provide good quality NHS provision in our county.
My question to the DPM earlier today was simple – when is the Government going to address this problem? pic.twitter.com/fJhworvvDQ
— Helen Morgan MP 🔶 (@HelenMorganMP) November 20, 2024
Last week I was contacted by a constituent whose husband has stage 4 bowel cancer. He had a routine scan in June but did not receive the results until early November, and unfortunately during that period he received unsuitable chemotherapy and his cancer has progressed. Given that Shropshire has the worst record in the country for CT and MRI scan results, may I ask the Deputy Prime Minister the same question that my constituent has asked me? When will the Government address this problem?
The Deputy Prime Minister
I am sincerely sorry to hear about the hon. Lady’s constituent’s husband, the terrible diagnosis at stage 4, and the delays leading up to that. We have explained before how difficult the inheritance was in respect of the cancer diagnosis waiting lists. People are waiting far too long for treatment, which is why the Chancellor put a record amount of money into our NHS so that we could catch cancer in time. I know that the Health Secretary is determined, as a personal endeavour, to ensure that people do not have to wait and do not end up in the circumstances that are so tragic for the hon. Lady’s constituent.
* Caron Lindsay is Editor of Liberal Democrat Voice and blogs at Caron's Musings
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10 Comments
As a former Lib Dem local government Cabinet Member for Social Care I hope I will be allowed to point out that the private care sector is extremely profitable – a profitability which soared during the covid epidemic. It could well afford to absorb the NIC increase out of these profits if it so chose, and it could also afford to pay much better wages – if it chose.
In July, the Guardian reported that Private Home care franchises in the UK “have a gross profit margin of around 36.5% and a net profit margin of 22–24%”.
Private healthcare : In May 2024, the average profit in the private healthcare sector was £118,243, with an average net profit margin of 24%.
Care home chains : During the pandemic, the profit margins of the UK’s largest care home chains increased by an average of 18%.
Children’s social care : In 2021/22, the 20 largest independent children’s social care providers made a profit of £310 million.
Those are good questions, particularly Helen Morgan’s. How do we get the Worst Press In The World to acknowledge that they have been asked? The Guardian is probably the nearest thing to a Lib Dem newspaper in this country, and you will search the Guardian’s pages in vain for any mention of the Lib Dem MPs. Their Political Correspondent, John Crace, who is very funny in a brutal kind of way, has a firm resolve never to write anything about the Lib Dems unless he can write something sneering, as witness his kebabbing of Ed Davey over the Horizon affair, which offered a convenient alibi for the failings of Pat McFadden of the sacred Labour Party.
Daisy’s constituent’s concern may be genuine but it is not justified. Selling land to pay inheritence tax cannot bring the value of the land below about five times the average farm value. That is entirely viable. Since the rate is only 20% and can be payed over ten years, it is hard to see how a farm that size could not cover 2% of it’s capital value over £3 million each year from profits.
@David Raw There’s nothing wrong with a business being profitable. A liberal society in which people have freedom to do what they want fundamentally depends on people being able to set up businesses and make profits by providing goods and services that help others – and I see no reason why that principle should exclude providing social care. There’s usually only a problem if barriers to entry/structural issues/monopolies prevent competition and thereby allow existing businesses to unfairly exploit their customers. Is there any reason to believe that is the case for social care?
More generally I do worry that we seem to be jumping on the populist bandwagon of opposing every tax increase just for the sake of opposition. We oppose the NI increase. We oppose closing the farming inheritance tax loophole. If we can’t support SOME tax increases, then how on Earth are we proposing to finance all the extra spending we keep calling for?
@ Simon R. “There’s nothing wrong with a business being profitable.”
I didn’t say that, Simon. But if society thinks it right to support care for the very elderly and frail, and if society provides most of the funding for that purpose, when does that profitability become excessive and undermines the quality of the service it provides ?
Are you happy that Private Home care franchises in the UK (many owned by billionaire non-doms) have a gross profit margin of around 36.5% and a net profit margin of 22–24% and then claim they cannot afford to pay a slight increase in employers national insurance contributions – or say their staff a reasonable wage ?
@ Simon R,
I agree, there’s nothing wrong with a business being profitable.
But the whole basis for contracting out a swathe of public services was that the private sector could do it more cheaply. And that may well have been true at one point. But if that profit margin is effectively coming out of the funds available to provide the broad spectrum of public services, in particular those supplied by local authorities, and it isn’t true that in-house provision is more expensive, then who benefits now?
And with local government capital budgets squeezed to virtually nothing, it’s impossible for them to recreate the provision that they used to have, leaving them at the mercy of unscrupulous private suppliers who know that councils have a mandatory requirement to fund such services and have nowhere else to go.
In counties such as Suffolk, where all of the provision has been privatised, the spiralling costs will probably drive local government reorganisation into unitary authorities which might buy a little time (but not much), but until councils can borrow the funds to recreate facilities and thus control costs more effectively, this problem is only going to get worse.
What’s the 36.5% gross profit margin a percentage of? Unless that’s stated, and without some understanding of the business model, it’s impossible to know whether that’s reasonable or whether it’s even a meaningful statistic.
If councils have nowhere else (in other words, no other companies) to go to in order to source care services, that suggests to me a lack of competition. I would expect the remedy there is to sort out why there is no competition.
I don’t see any objection to allowing councils to compete with the private sector for contracts – as long as robust arrangements are in place to award contracts fairly, although I’d have thought in some ways it would be better if it were the people receiving the care who had the ability to choose which company they want to provide it. If councils could actually provide a care service more cheaply than the companies they contract out to, then it shouldn’t be hard to put together a business case to secure funding to do that, and then start saving money. So I wonder if it’s more likely to be issues with the law that prevent that happening?
@ Simon R. I’m sure you’re capable of working it out, Simon. End of.
The Access Group
https://www.theaccessgroup.com › … › Home Care… Is the home care business profitable in the UK | Industry analysis ?
Home care agency profit margins in the UK can reach 22% to 24% net when it comes to private franchises. The average gross home care profit margin in the UK for private franchises hovers at around 36.5%. Home care franchise profit margins compare favourably to franchises in other industries.
@ Simon R.,
What prevents it is not so much the law as the ability of local councils to borrow for capital investment. Local government is not free to raise money as it sees fit – the cap on council tax increases makes absolutely sure of that, and if you can’t raise enough income to pay the interest on debt, and your budget is squeezed by social care and SEND costs rising far above the rate of inflation, to name but two widely publicised issues of late, the ability to invest to save is greatly restricted.
The system is designed to force short term decision making upon local councils at the cost of long term strategic provision.
Nothing wrong with a business making a decent profit. Plenty wrong with a business making an indecent and excessive profit. If David Raw’s figures are right, commercial care home providers are making an indecent and excessive profit, due to market failure.
So here we see the Lib Dems calling for the Government to bung more financial support to private businesses which are already making an excessive profit. That is a crazy way to seek to sort out the crisis in social care. Any available money would be much better given to councils so that they could afford to pay for care.