The government is under increasing pressure to exempt hospices, care homes, and other healthcare providers from the upcoming rise in National Insurance contributions, set to take effect in April. While the NHS and public sector will be shielded from the tax increase, private hospices, pharmacies, and care providers will not, sparking widespread concern among opposition parties and healthcare leaders.
During Prime Minister’s Questions, Conservative leader Kemi Badenoch and Liberal Democrat leader Sir Ed Davey called on Prime Minister Sir Keir Starmer to support an exemption for these vital services. However, Labour MPs voted against the move, with Starmer arguing that the tax rise is necessary to fund record investments in the NHS.
Badenoch urged the government to back an exemption, stating that hospices, care homes, and pharmacies provide essential services and should not bear the brunt of the tax increase. In response, Starmer highlighted that the government had already allocated £100 million to support adult and children’s hospices, along with an additional £26 million through the children’s hospices grant.
Sir Ed Davey pressed the Prime Minister to ensure Labour MPs would not oppose a Liberal Democrat proposal to exempt NHS service providers from the National Insurance hike. He warned that GPs, dentists, community pharmacists, and care homes were “deeply worried” about the financial impact of the rise.
Starmer defended the government’s position, stating that the tax increase was essential to secure the funding needed for the NHS. “It isn’t right to simply oppose the measures we had to take to raise the money and at the same time say… that he wants the benefits of the increase in funding for the NHS,” he said.
Following PMQs, MPs voted against the exemption by 307 to 182, leaving hospices and other providers to face the increased costs. From April, the rate of National Insurance contributions for employers will rise from 13.8% to 15%, adding significant financial pressure to sectors already struggling with funding shortfalls.
Hospices, which provide end-of-life care free of charge, rely heavily on charitable donations, with only a third of their funding coming from the government. While the government announced £100 million in additional funding for hospices in England in December, the majority of this is earmarked for capital projects, such as building improvements, rather than day-to-day operational costs.
Care homes have also raised concerns, warning that the extra funding provided by the government does not cover the tax rise and could force some providers to close. Similarly, the National Pharmacy Association has urged its members to reduce opening hours and services in protest over funding pressures, including the National Insurance increase.
The debate highlights the growing tension between the government’s need to raise revenue for public services and the financial strain on essential healthcare providers. As the April deadline approaches, calls for a rethink on the exemption are likely to intensify.
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