The House of Lords has voted to exempt health and care providers from the employer National Insurance Contributions (NIC) increase.

Set to come into effect in April 2025, the employer NIC hike was first announced by the Chancellor of the Exchequer at the Autumn Budget 2024. The NIC by employers will rise from 13.8 percent to 15 percent. In addition, the threshold at which businesses start paying National Insurance on a worker’s earnings will be lowered from £9,100 to £5,000.

The National Insurance Contributions (Secondary Class 1 Contributions) Bill will implement the new rates of employer NICs.

However, this increase in employer NIC has been met with concern and even protested by the health and social care sector.

The British Healthcare Trades Association (BHTA) Chief Executive, David Stockdale, said that he was deeply concerned about the impact of the employer NIC hike on its members, as many member companies provide vital equipment to the NHS and local authorities. David said that without additional support from the UK Government, the NIC hike, along with other rising business costs and pressures, could ‘decimate’ vital sectors, like community equipment.

Melanie Williams, President of the Association of Directors of Adult Social Services (ADASS), warned that the increase in NIC will have “catastrophic consequences for millions of people drawing on care and support”. Some care providers say they will stop providing care in certain areas or stop operating completely because it is no longer cost effective, reducing the care available for people, she stated.

Providers Unite organised a peaceful protest to demonstrate the catastrophic impact of the employer NIC increase on the social care sector. The coordinated day of action highlighted the value of social care and warned that if the Budget proposals go through then care and support providers will be forced to close.

On 25 February, members of the House of Lords put forward amendments to the National Insurance Contributions (Secondary Class 1 Contributions) Bill.

There were eight divisions (votes) on proposed changes to the bill. Importantly, members of the House of Lords voted to agree to maintain current contribution rates or provide exemptions from higher rates for health and care providers.

Welcoming the announcement, Professor Martin Green OBE, Chief Executive of Care England, said: “This is a huge moment for the social care sector and a testament to the relentless campaigning from care providers, local trade associations, national bodies, the Care Provider Alliance, and Providers Unite.

“For too long, social care has been overlooked, but yesterday’s vote proves that when we come together, our voices can no longer be ignored. This exemption would be a vital lifeline for thousands of providers already on the brink and will recognise the essential role social care plays in our society.

“But let me be clear – this fight is not over. The Bill now returns to the House of Commons, and it is up to the Secretary of State, the Prime Minister, and every MP to decide whether they will stand with social care or allow a sector that millions rely on to collapse under the weight of unsustainable costs. They must be on the right side of history and act now to protect the future of care in this country.”