'We're having to look at the services we can keep': Calls to exempt hospices from NI hike as operators sound alarm

20 March 2025, 10:54

Hospices have called to be made exempt from national insurance increases, as end-of-life services face huge cost rises from April.

Prospect Hospice in Swindon said that it faced a £200,000 increase in annual costs from April, caused by the rise in employer national insurance and the increase in the minimum wage.

Jo Hollingsworth, the hospice's director of people, told LBC that the hospice would "have to look at the impact on services... and what we can provide."

The Conservatives and the Liberal Democrats have urged the government to exempt hospices and GP practices from the increase.

Labour voted down a move that would have backed the exemption, with Keir Starmer saying the money was needed to fund the NHS.

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The government has allocated £100 million in extra funding to hospices, but this is ring-fenced for capital spending rather than services.

Ms Hollingsworth said Prospect Hospice, whose president is Queen Camilla, didn't need money for things like garden improvement or patient room redecoration as theirs are already in a "beautiful" condition thanks in part to their volunteers.

"Lots of hospices are in a similar position to us," she said. "We've got no fat on the bone. It's a real inequity that needs to be addressed."

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Noah's Ark Children's Hospice in north London said the national insurance rise represented "basically a £100,000 tax on us that we hadn't budgeted for."

Sophie Andrews, the hospice's CEO, told LBC's Nick Ferrari at Breakfast that hospices were "an extension of the NHS" and so should be exempt from NI rises.

"I enjoy being in the charity sector because we can do really great stuff and we can be creative, but we should be fairly funded," she said.

"If we free up a bed in NHS hospital, then the funding for that child should come with the child."

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On Wednesday, Labour MPs overturned Lords amendments designed to introduce exemptions from the employers' national insurance increase, leading to accusations of voting for a "health tax".

GP practices, hospices, charities and small businesses were among the groups peers sought to protect from April's changes when they approved changes to the National Insurance Contributions (Secondary Class 1 Contributions) Bill.

But the Government removed the carveouts by successfully moving 21 motions to disagree with the amendments on Wednesday.

Peers will now weigh up whether to make further amendments as part of the parliamentary tussle known as "ping-pong", where legislation moves between the two Houses until agreement is reached.

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Measures contained in the Bill include increasing the rate of employers' NICs by 1.2 percentage points to 15%, with payments starting when an employee earns £5,000, down from the current £9,100.

The Treasury estimates the policy could raise £25.7 billion a year.

But the Office for Budget Responsibility (OBR) believes the actual amount of money generated for the Exchequer will be around £16.1 billion by 2029-30 as firms curb wage rises, cut hours and reduce profits while public sector employers get compensation in their budgets for the change.

Liberal Democrat Treasury spokeswoman Daisy Cooper, reacting to the decision to reject an amendment to exempt health and care providers from the NIC increase, said: "Labour MPs today have voted for a health tax on GPs, dentists, pharmacies, hospices and care homes, and it is patients who will pay the price."

She added: "On April 6, worried social care providers and GP surgeries are going to be hit with bills they simply cannot afford. Rachel Reeves must finally see sense, U-turn on this disastrous policy and exempt health and care providers from this damaging jobs tax."

The Government won six votes in the Commons to disagree with Lords amendments, with the other proposals from peers overturned without the need for a division.

Ahead of the votes, Treasury minister James Murray said: "In order to restore fiscal responsibility and get public services back on their feet, we needed to raise revenue including through the measures that this Bill will introduce and many of the amendments from the other place put at risk the funding that this Bill seeks to raise.

"So let me be clear, to support these amendments is also to support higher borrowing, lower spending or other tax rises."

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Conservative former minister Wendy Morton said: "I think the point that we're really trying to emphasise from this side of the House is that the Government appears to be giving with one hand but taking away with the other. The hospice sector is just one example of many sectors which have been adversely affected by this cruel tax that the Government is placing on them."

Her party colleague Sir Roger Gale (Herne Bay and Sandwich) said: "The money that is being given by the Government, taxpayers' money, to hospices, children's hospices like Shooting Star, like Demelza House, is for buildings, the national insurance increase is hitting directly the people that do the work upon which very sick children depend. Why is that imposition being made?"

Mr Murray replied that the funding Sir Roger was referring to was a £100 million sum designated for capital improvements for hospices.

He continued: "There will be £26 million of revenue to support children and young people's hospices, and more widely, with hospices being charities, the (Government) supports provides support for charities including hospices through the wider tax regime, which is the most generous in the world."

For the Conservatives, shadow Treasury minister Gareth Davies said: "This Chancellor is delivering a £25 billion tax rise on jobs across the country, that will stifle growth, hold back British business, and harm public services.

"This is a Labour national insurance Bill that will take the tax burden, unbelievably, to the highest level in history, on the backs of working people."

Conservative former minister Dame Caroline Dinenage accused Labour of introducing an "indefensible jobs tax on our most vulnerable", adding: "They should be utterly ashamed of themselves."