The Chancellor’s tax raid on employers will hit family doctors, dentists and care homes as well as charities.
Chancellor Rachel Reeves defends Budget after backlash over £40bn tax raid
Rachel Reeves was told to go back to her “socialist abacus” after GPs warned tax hikes will lead to job cuts.
Family doctors fear the increase in national insurance contributions will land them with bills of £40,000 a year.
Dentists said they will have to pass on the extra costs to patients and will mean more practices only provide private treatment.
Shadow health secretary Victoria Atkins said the Chancellor’s tax grab was “economically illiterate”.
She said: “Labour’s manifesto breaking tax raid is not just an attack on businesses, or working people – but is also a disastrous hit on our health and care services.
“Whether it be hospices, GP surgeries, pharmacies, dental practices or MacMillian nurses, Labour’s tax hike will take money away from frontline services with no plan as to how this will improve patients’ experiences.
“This is economically illiterate and shovels more costs onto services. Labour need to go back to their socialist abacus and come up with meaningful reforms for health and care services.”
Public sector employers will be covered for the increased cost of the rise in employer national insurance contributions announced in the Budget.
But family doctors operate effectively as a business, which means they will not be exempt from the changes.
Dentists, care homes, hospices and charities all fear they will struggle to meet the extra costs.
Dr Jess Harvey, a GP based in Shropshire, said GP practices will “really struggle”.
“During these contract negotiations for our new contract, unless we’re getting given suitable remuneration to cover this national insurance inflation, then we’re going to really struggle,” she said.
“There are going to be practices to start to make redundancies. There are practices that were already considering redundancies because it’s so hard to manage financially, and if we don’t get enough money to continue to run these practices, then we’re not going to be able to provide the service that people want.”
Dr Harvey also said the amount of money surgeries are getting has not changed in six years, amid a rise in staffing costs.
“Yes, we are classed as private businesses, but the money that we get to run that business isn’t generated by profit, as I’m sure you can imagine, in terms of we aren’t charging people for service,” she added.
Paul Stanley, a practice manager at Gas House Lane Surgery in Morpeth, Northumberland, told the BBC the changes could cost his surgery about £40,000 a year.
“It is a huge amount of money and our staff costs do equate to, I would probably say, about 65-70% of all of the costs of the practice,” he said.
“I think what we’re looking at is an unfunded increase in our staffing costs, which may ultimately impact on our resources and our staffing levels.”
The British Dental Association wrote an open letter to the Chancellor warning the changes will mean a steep rise in costs for all dental practices.
It said: “Hundreds of NHS providers are already delivering NHS treatments at a financial loss. Failure to soften this blow will push more of them closer to the brink or with no choice other than to move away from NHS provision.
“Make no mistake, these cost increases will have an impact on access to NHS dentistry.”
A care group called on the Government to exempt social care providers from the hike or ring-fence funding to cover it.
Independent Care Group chairman Mike Padgham said: “The Government has to do something and it has to do it quickly, as I am already hearing from providers that this might be the last straw for some of them.”
Care England, which represents providers in adult social care, said the national insurance rise, combined with wage rises, will leave the sector with “an additional circa £2.4 billion funding hole to plug”.