Navigating Budget Changes: Implications for Social Housing Providers as Employers

Today’s budget brings key implications for social housing providers as employers, alongside supportive measures aimed at strengthening the sector overall. The Chancellor has announced a consultation on a new five-year social housing rent settlement proposal, which promises long-term funding certainty to help social landlords invest in new homes. This plan includes potential rent increases at Consumer Price Index (CPI) inflation plus one per cent, offering financial stability. Additionally, the government has committed £500 million in new funding for the Affordable Homes Programme (AHP) to deliver up to 5,000 affordable homes, as well as measures to protect existing stock by reducing Right to Buy discounts.

Anne Elliott, Chief Executive of ema consultancy, examines the Chancellor’s announcements that impact social housing providers as employers and the strategies needed to support their workforces amidst these changes.

Increase in Employers’ National Insurance Contributions

From April, employers' National Insurance (NI) contributions will increase by 1.2 percentage points, bringing the rate to 15%. Coupled with the lowered secondary threshold from £9,100 to £5,000, this change will substantially impact social housing providers’ wage costs. This increased financial pressure means providers need to assess workforce structures and budgets carefully. The new NI obligations will require thoughtful budgeting and potentially some cost-saving measures to accommodate this added expense without compromising workforce stability.

Rise in National Living Wage

The planned rise in the National Living Wage to £12.21 an hour represents a 6.7% increase, adding around £1,400 annually for each full-time worker. For social housing providers employing frontline and support staff, payroll budgets will need adjusting. While this increase promotes fairer wages, it also underscores the need for a strategic approach to recruitment and retention. Maintaining a committed workforce amid wage pressures requires more than competitive salaries; providers should consider broader rewards, training, and well-being initiatives to remain attractive as employers.

Recruitment and Retention Strategies

With rising wage costs, retaining quality staff in the social housing sector may become more challenging, especially when faced with limited budgets. The National Living Wage increase could support retention by promoting fairer compensation, but providers will need to balance this with other non-monetary benefits. In a sector that attracts mission-driven individuals, focusing on holistic employee engagement—including well-being, training, and career progression—will be critical to retaining skilled staff.

Strategic Workforce and Budget Management

The cumulative effect of increased NI contributions and wage requirements compels social housing providers to rethink workforce and budget strategies. To achieve financial sustainability, providers may need to review essential and non-essential service allocations, making efficiency a priority. This approach allows providers to uphold standards for tenants while adapting to these new employment-related costs.

Looking Ahead

Social housing providers face both challenges and opportunities. By navigating these changes thoughtfully, providers can reinforce their commitment to employee welfare, continue being employers of choice and take advantage of government support aimed at strengthening the social housing sector.