Leading homecare providers, who deliver over 47 million hours of homecare each year today warn the Chancellor of the Exchequer that the additional costs of the new National Living Wage could lead to a catastrophic failure of home-based care services, unless there is urgent action from Government and local councils to address underfunding.
While highly supportive of Government’s announcement of a new National Living Wage, representatives from the homecare sector publish today an open letter to the Chancellor of the Exchequer, Rt Hon George Osborne MP (see below and note 2).
UKHCA’s Policy Director, Colin Angel, said:
“Care providers leaving the state-funded market would cause considerable distress for people who use homecare services and their families; create a significant burden for local councils and increase the problem of people being unable to leave hospital promptly.
“We are asking the Chancellor to bring about changes in the funding of homecare to ensure that workers benefit from Government’s policy, while still enabling these vital services to remain economically viable.”
Text of open Letter to Chancellor, Rt Hon George Osborne MP
27th July 2015
National Living Wage in the Homecare Sector
As major providers in the homecare sector, delivering together over 47 million hours of homecare care a year, we welcome Government’s commitment to low-paid workers through a new National Living Wage. However, unless the additional costs are fully-funded, there is a serious risk of catastrophic failure to support people who receive state-funded care at home.
While many business sectors will be able to pass on additional wage costs to their customers, local councils, who purchase over 70% of all homecare consistently use their dominant purchasing power to push rates paid for services well below their real cost.
We estimate that to address the existing under-funding of homecare and implement the National Living Wage will require an increase of at least £753 million from councils and the NHS in the first year alone (note 3). As evidence for this we can find no simpler illustration than our recent use of the Freedom of Information Act, which revealed that councils paid an average of £13.66 per hour for older people’s homecare (note 4). After accounting for Government’s proposed changes to National Insurance Contributions and Corporation Tax, we estimate that the new National Living Wage will require councils to pay at least £16.70 per hour, including careworkers’ travel time and all other costs (note 5).
Government has charged the Low Pay Commission with overseeing the National Minimum Wage. The Commission has repeatedly warned that risks to meeting the existing Minimum Wage in the social care sector are exacerbated by reductions in local authority budgets and constrained fee levels. The Commission most recently stated compliance with the Minimum Wage in the social care sector was only likely to be resolved when action was taken to address the commissioning practices of councils (note 6).
Without urgent action from Government and local councils (note 7) to address the deficit in funding, continued supply of state-funded homecare will become unviable at a time when Government looks to social care services to support an over-stretched NHS, particularly supporting people to leave hospital promptly.
Market exit by providers would cause considerable distress for people who use homecare services and their families; create a significant burden for local councils who would have to find replacement providers and provide uncertain employment prospects for trained and committed careworkers.
To ensure that Government’s policy can be implemented without destabilising an increasingly fragile homecare sector, there are a number of solutions which we urge you to implement urgently, in conjunction with your colleagues, where appropriate, in England and the UK’s devolved administrations (note 8):
1. Address the increase to the social care wage bill through the forthcoming Spending Review, ensuring that local authorities are sufficiently resourced and that monies are actually used to fund front-line homecare services.
2. Ensure that statutory regulators in all four UK administrations are empowered to oversee the commissioning practice of local authorities, with particular reference to their impact on the stability of local care markets (note 9).
3. Change the VAT exemption for welfare services to ‘zero-rated’ status. This would ensure that councils and private individuals continue to purchase homecare services without paying VAT, but would enable homecare providers to reclaim VAT on the costs they incur.
4. Consider tax incentives for private individuals funding their own social care or for members of their family where they do not meet the financial eligibility criteria for state-funded social care.
Our workforce is our greatest asset and we are committed to ensuring that careworkers are rewarded for the immense contribution they make to the lives of over 883,000 older and disabled people each year.
Resolving this issue now is critical and it will only happen through a commitment to proper funding of care services.
Mike Padgham, Chairman, United Kingdom Homecare Association
Bridget Warr, Chief Executive, United Kingdom Homecare Association
Raina Summerson, Chief Executive, Agincare Group
Darryn Gibson, Chief Executive, Allied Healthcare Group
Claude Suppiah, Managing Director, ANA Nursing
Russell Oakden, Chief Executive, Ark Home Healthcare Ltd
Duncan Berry, Chief Operating Officer, Bluebird Care Group
Kevin Lewis, Chief Executive, Caremark Limited
Scott Christie, Chief Executive, Carewatch Care Services Ltd
Craig Rushton, Chief Executive, City & County Healthcare Group
Jonathan Vellacott, Chief Executive, Direct Health Group Ltd
Mary Cotterell, Director, Everycare UK Ltd
Steve Allen, Chief Executive, Friends of the Elderly
Nicola Mewse, Group Managing Director, Hales Group Health & Social Care
Trevor Brocklebank, Chief Executive, Home Instead Senior Care
Peter King, Managing Director, Kemble Care LLP
Narinder Singh, Managing Director, MiHomecare
Wayne Rees, Managing Director, Nightingales
Lesley Megarity, Chief Executive, Optimum Care
Lynda Gardner, Chief Officer, Oxford Aunts Care
Jonathan Bruce, Managing Director, Prestige Nursing Ltd
Deepesh Patel, Director, Radis Community Care
Ken Deary, Managing Director, Right At Home UK
Ravi Bains, Chief Executive, Sevacare UK Ltd
Jane Townson, Chief Executive, Somerset Care
Dominique Kent, Director of Operations, The Good Care Group
Richard Smith, Company Director, Way Ahead Care
Sushil Radia, Managing Director, Westminster Homecare
Notes for Editors
1. A new National Living Wage is intended to come into force from April 2016 for workers of 25 and over, initially paid at £7.20 / hour and increasing to £9.00 / hour by 2020. This compares to the uprated National Minimum Wage of £6.70 / hour, which comes into force from October 2015.
2. The open letter, signed by major independent and voluntary sector homecare providers and members of UKHCA’s non-executive board is also available from: www.ukhca.co.uk/pdfs/UKHCAOpenLettertoChancellor.Final.20150727.pdf
3. Assumes no other changes in demand, such as an ageing population, meeting social care needs which are currently un-met, or introducing additional services aimed at early intervention.
4. UKHCA (2015) The Homecare Deficit, page 7. See: www.ukhca.co.uk/downloads.aspx?ID=458. Our calculation that the minimum price needed to cover the current National Minimum Wage, including careworkers’ travel, was £15.74 per hour at the time.
5. Angel, C (2015) A Minimum Price for Homecare, Version 3. See: http://www.ukhca.co.uk/downloads.aspx?ID=434.
6. Low Pay Commission (2014) National Minimum Wage Report 2014, paragraphs 4.49-4.62.
7. Our reference to councils also includes the five Health and Social Care Trusts in Northern Ireland which commission homecare services.
8. While the National Minimum Wage and National Living Wage apply across the UK, social care policy is a devolved matter, managed independently by government in Wales, Scotland and Northern Ireland.
9. In response to the collapse of the Southern Cross residential care home network, a market oversight regime is already in operation by the Care Quality Commission in England (See: http://www.cqc.org.uk/content/market-oversight-adult-social-care). A similar system has been proposed in Chapter 7 of The Regulation and Inspection of Social Care (Wales) Bill (See: http://www.assembly.wales/laid%20documents/pri-ld10106%20-%20bil%20rheoleiddio%20ac%20arolygu%20gofal%20cymdeithasol%20%28cymru%29/pri-ld10106-e.pdf). However, these regimes monitor the financial health of individual providers, rather than the commissioning practices of councils or the NHS.
10. United Kingdom Homecare Association (UKHCA) is the professional association for more than 2,200 domiciliary care providers in Great Britain and Northern Ireland.
11. UKHCA’s mission, as a member-led professional association, is to promote high quality, sustainable care services so that people can continue to live at home and in their local community. We do this by campaigning, and through leadership and support to social care providers.
12. UKHCA has a vetting procedure for its members, all of whom agree to abide by the Association’s Code of Practice, which can be found at www.ukhca.co.uk/codeofpractice.aspx.
13. Homecare encompasses provision of personal care, to people in their own homes. For many, homecare is the alternative of choice for people who would otherwise need to move into residential accommodation.
14. The majority of homecare is funded by the state (usually by local council social services departments, Clinical Commissioning Groups (CCGs), or Health and Social Care Trusts in Northern Ireland). However, homecare services are largely delivered by independent and voluntary sector providers working under contracts with the statutory sector.
15. For further information please contact:
Colin Angel, Policy and Campaigns Director
United Kingdom Homecare Association Ltd
Sutton Business Centre, Restmor Way, Wallington, SM6 7AH
Telephone: 020 8661 8188
Mobile: 07920 788993