Zarah ChoudharySome Age UK services which help vulnerable older people – as well as their families and unpaid carers – will be forced to scale down or close as a result of the Government’s decision to increase Employer National Insurance contributions (NICs).
The Government increased NICs from 13.8% to 15%, effective from in April 2025, in addition to lowering the salary threshold at which they become due.
Age UK’s report ‘Nothing Left to Trim’ set out the findings of its recent survey of local Age UKs and National local Partners.
In total, Age UK received 69 responses to the survey – a response rate of more than 50%.
Through their replies, many made it clear that as a result of their increased costs brought about by the Budget, they will have to: let go some staff; increase the charges levied on older people who pay for their own services; and close some services, if they can no longer see how to make them viable, given their increased cost base.
The 69 local Age UKs that responded to the survey reported significant financial strain due to the increase in costs brought about by the Budget.
Collectively, these organisations face an additional annual financial burden of £6.27m.
As a result, seven in 10 respondents indicated that these changes will reduce their ability to deliver essential services to older people.
The financial strain is also impacting staffing levels, with seven in 10 local Age UKs stating that they may need to consider reducing their workforce.
Furthermore, five in 10 respondents revealed that they are now having to consider cutting services or even handing back contracts to the NHS or local councils that originally commissioned them.
Many organisations can no longer afford to provide services on the terms agreed before the Budget was announced, raising concerns about the future availability of crucial support for older people.
The Government’s decision to increase employer NICs and lower the salary threshold at which these start to be paid could those employers with relatively large numbers of low paid staff particularly hard.
This means that the charity sector as a whole could be seriously impacted by the changes.
In addition, the voluntary sector itself has been struggling to keep going over the last few years, many organisations having been battered firstly by the pandemic, then by the cost-of-living crisis.
Age UK also voiced concerns that if local shops are forced to raise the prices for some of their services, they could become unaffordable for older people in need.
The charity called for more financial help to be made available to local charities of all kinds.
This financial help could be provided directly, such as via an exemption for local charities from the Employer NICs changes, or indirectly – for example, through dedicated funding made available to councils in the final local government finance settlement, or through some NHS funding being set aside to meet the additional costs of its contracts with the VCSFE.
In addition, while Age UK supported the Government’s decision to increase the National Living Wage to help low paid staff, this is another cost that local Age UKs must now meet at the same time as weathering the changes to Employer NICs.
The combination of all these increased charges coming together is simply too much for some local charities, whose resilience has already been weakened by the events of recent years.
Despite these challenges, local Age UKs, and charities more generally, remain strongly committed to their beneficiaries and communities.
However, this unwavering commitment has stretched their resources thin and has brought some close to or beyond collapse – several local Age UKs were forced to close for financial reasons during 2024, a situation replicated in other parts of the VSCFE too.
Age UK is urging the Government to provide more financial support to local charities so they can continue delivering vital services within their communities.
Without additional help, many organisations may struggle to maintain essential support for older people.
One way this financial assistance could be provided is through a direct exemption from the employer NICs changes for local charities.
Alternatively, the Government could offer indirect support by allocating additional dedicated funding to councils in the upcoming Final Local Government Financial Settlement.
For local charities that work closely with the NHS, such as many local Age UK branches, a portion of NHS funding could also be set aside to help them cope with the rising costs.
Paul Farmer CBE, chief executive at Age UK, said: “At a time when the Government is saying it wants to work more closely with charities, and when the public demand for our services is higher than it has ever been before, it’s deeply frustrating that the changes to Employer NICs in the Budget are undermining our ability to support vulnerable older people and their families and communities.
“If we were truly acting in response to the needs we see we would be opening many more services, especially in areas with high levels of deprivation and demand.
“Instead, the reality is that many local Age UKs are worried about sustaining their existing provision, and are planning to retrench and, in some cases, close altogether forms of help that are highly valued by the older people who use them.
“As one local Age UK leader said to me recently, ‘we only just survived the pandemic, then the cost of living crisis, so it’s terrible to be hit by this surge in costs now, just when we thought there was light at the end of the tunnel and brighter times lay ahead.’”
“The Government has provided extra funding to local councils, and to the NHS, in recognition of the impact of the changes to Employer NICs, but it has so far chosen not to compensate charities that work closely with them to deliver vital services, in the same way.
“Of course, we understand that the public finances are under severe stress, but it seems utterly self-defeating to allow effective voluntary sector run services to wither and die, when they contribute so much to achieving the Government’s NHS and social care goals, among others.
“And make no mistake, once a local charity closes there’s no quick or easy coming back.
“That’s why we sincerely hope that Ministers will look at reports like this one about the – no doubt unintended – consequences of its Budget changes to Employer NICs for the viability of local charities and take action to help organisations and services to survive.
“The fact is that very few local VCSFE organisations are in a position to withstand increased costs on the scale they are now facing, and the consequences for local people and communities will be severe.”
