SOCIAL care providers are facing a “catastrophic” financial precipice which could collapse thousands of private and not-for-profit groups, a health sector think tank has warned.

The Nuffield Trust said the combination of an increase in employers’ National Insurance contributions and the national minimum wage, announced in the July Budget, could cost the sector an additional £2.8 billion.

The Trust warned that “swathes of the social care market” could collapse as a result.

Labour’s Budget included a 1.2 per cent increase in employers’ National Insurance to 15 per cent. The threshold at which the tax starts being paid was also lowered from £9,100 to £5,000.

The minimum wage meanwhile will increase by 6.7 per cent from April next year, from £11.44 an hour to £12.21.

The Trust analysed the cost effects on almost 18,000 independent care organisations in England, excluding local authorities.

Nuffield Trust deputy director of policy Natasha Curry said that while the government wanted to reform social care provision, “there may be little left of it to reform” unless the sector received urgent help.

Public-sector union Unison head of social care Gavin Edwards said  inadequate funding was “pushing the sector to the brink.”

He said: “A fully-funded national care service can’t come soon enough to provide the stability, fairness, and dignity this sector desperately needs.”

The Department of Health and Social Care said the government inherited a social care system in crisis but was giving local authorities an additional £800 million for social care costs.