According to a new survey released by VODG (The Voluntary Organisations Disability Group), disability nonprofits could be facing a shortfall in their budgets of up to £266m next year after the recent increases to National Insurance contributions and the rise in minimum wage.

The survey was sent to VODG’s 130 member NfP organisations and found that a full third of those charities were close to handing back local governments contracts due to a lack of resource, with a quarter of them considering redundancies. 

Of the disability charities that filled out the survey, 60% of respondents were expecting and planning for a financial deficit by March 2025.

If that comes to pass, many will need to make redundancies, scale back on their opening hours and / or implement pay freezes. To prevent that, the Government will need to step in and either fully fund or exempt some charities from the NIC rises.

Many charity umbrella bodies have been warning for a while now that the NIC rises will cost the entire sector an estimated £1.4bn a year.

“The recent budget announcements on increased employer national insurance contributions and national living wage present significant challenges for disability services. Third-sector providers of frontline services have faced years of underfunding, and these changes are set to push charities to the brink. In the next few months, many local authorities will be finalising their proposed funding settlements with providers. Increasingly it is looking as if the level of uplift in funding will fall well short of the resources that are needed to ensure that the organisations providing the services do not lose money. Disability charities do not want to hand contracts back to local authorities but equally they cannot take on the financial consequences of services which are not adequately funded. The government is seeking to stabilise the social care sector in advance of moving forward towards a National Care Service. Unfortunately, the results of this survey show that these unfunded and substantial increases in costs will have precisely the reverse effect. Given the fragile state of the social care sector both private and not-for-profit, it is hard to see how this will not compound challenges already prevalent within the system.”

Rhidian Hughes – Chief Executive, VODG

As of yet though, Rachel Reeves, the Chancelor has stood firm on refusing exemptions to NIC rises for voluntary organisations.  

“As a charity we employ close to 1000 staff, so you can imagine the financial impact this national insurance change will have. As providers we cannot absorb these costs and as a result, disabled people will go without support, with devastating consequences. We cannot let this happen. Social care is not a problem, an inconvenience, or a financial drain. It provides a brilliant opportunity to support people to have ambitious lives. It is a lifeline for so many people, now we need the government to throw people with disabilities a financial lifeline, rethink, and realise the true value and cost of social care.”

Lisa Hopkins – Chief Executive,  SeeAbility