A hike in employer National Insurance (NI) contributions coupled with rises in minimum wage rates will plunge three in five disability charities into financial deficit by March 2025, a survey is warning.

It estimates that charities supporting disabled people face a £266m shortfall due to the increases, which were announced in the government’s Autumn Budget.

One in three say they will have to hand back local council contracts as they will no longer be able to fulfil them.

One in four are considering redundancies, according to the survey of 130 disability charities carried out by Cordis Bright and commissioned by the Voluntary Organisations Disability Group (VODG).

Pay freezes and cutting hours will be undertaken by just under one in five charities.

“The recent Budget announcements on increased employer national insurance contributions and national living wage present significant challenges for disability services,” said VODG chief executive Rhidian Hughes.

“Third sector providers of frontline services have faced years of under-funding, and these changes are set to push charities to the brink.

He added: “Without an exemption, or protected funding to cover the commitments being introduced by government, it will mean that services for disabled people will at best shrink, and at worse close.

“Without this action, the rights and legal entitlements of disabled people to care and support will be pulled away.

“Public sector commissioners are in no place to be able to pick up and run these services and the question we are left with is who will then support disabled people with life-long conditions?’

'Lifeline' needed for charities

Lisa Hopkins, chief executive of SeeAbility, said that as an employer of 1,000 people “you can imagine the financial impact” of the NI increases.

“As providers we cannot absorb these costs and as a result disabled people will go without support, with devastating consequences,” she said.

“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.”

David Laws chief executive John Heritage said increases in NI contributions and minimum wage commitments will add £1m a year to its running costs.

“This is before we even consider adding in wider inflationary pressures we continue to experience, he said.

“This huge cost increase will mean providers like ours will have to make even tougher choices about the services we provide and if we can continue to provide some of these services as well as if we are able to invest in existing services and our fantastic teams in their pay going forward.”

Earlier this month a Charity Retail Association survey said a third of charities will be forced to cut staff roles due to NI and minimum wage increases. A fifth said they will have to open fewer hours.

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