United Kingdom Homecare Association
The professional association for homecare providers

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UKHCA Media Release

Provider withdrawal from local state-funded contracts - 08/07/2016

Public statements from homecare providers withdrawing from local authority contracts on the grounds of commercial viability demonstrates the increasing fragility of social care markets (notes 2 and 3).

UKHCA notes that many more withdrawals from contracts have happened without media coverage, and are already in progress.

Councils (and the health and social care Trusts in Northern Ireland) have legal obligations to meet people's needs.To do so, they require stable, functioning care markets in the independent and voluntary sector.

In England, statutory guidance to the Care Act 2016 requires councils to operate contract terms, conditions and fee levels which enable their independent and voluntary sector providers to pay careworkers at least the National Minimum Wage (or National Living Wage for workers aged 25 years and above), ensure that workers receive proper training and that services promote the wellbeing of older and disabled people (note 4).

As the national professional association, UKHCA has repeatedly warned governments in all four UK administrations and individual councils that homecare agencies cannot continue to accept unsustainable fees.

Until now, most councils have been able to re-let contracts to alternative providers. However, with significant increases from the National Living Wage this year and for the next two years, providers will be unable to take on larger volumes of uneconomic business, unless they can see this bringing in additional revenue at no more than a marginal increase in costs.

UKHCA publishes a Minimum Price for Homecare for state-funded services, which includes rationales for our assumptions for providers' costs (note 5).

While a small number of councils have entered into proper discussion with providers about their costs, many councils have simply imposed a rate, based on their own (often inaccurate) assumptions on costs and what the council believes it can afford.

Even where councils believe that they have covered the additional costs of the National Living Wage this year, increases for 2016-17 have generally been insufficient to address the underlying underfunding from previous years.

We are struck by the lack of understanding shown by some councils of the difference between hourly wage rates and the total cost of a care service. In addition to wages for the time spent delivering care, employers must cover careworkers' travel time, reasonable travel costs, Employers' National Insurance, and accrue for statutory holiday pay, sickness and pensions.We estimate that the costs of the careworker alone at the National Living Wage are almost £12 per hour, before taking into account the costs of running the service and meeting regulatory requirements.

Hourly fees of around £13 per hour, publicly rejected by two providers in the North West of England during the week beginning 4 July 2016 , are almost certainly likely to create a workforce paid at bare National Minimum Wage (National Living Wage for workers aged 25 years and above), and increases the risk of non-compliance with minimum wage regulations.

No homecare provider takes the decision to withdraw from delivering services lightly, but we should expect more independent and voluntary sector organisations to do so.This is likely to be a combination of providers serving notice on contracts, declining new referrals, or refusing contract extensions unless accompanied by realistic fee increases.

Independent and voluntary sector providers have to think carefully before taking on work rejected as uneconomic by a competitor, unless their cost base is significantly lower.

Rapid and extensive withdrawal from contracts in a local area would create significant pressures on councils' commissioning and procurement functions, trying to find alternative providers with sufficient capacity, or managing TUPE transfers of a contracted workforce. Most councils have already outsourced most or all of their homecare provision, so bringing services in-house is unlikely to be a solution.We also note that in-house homecare services cost around 2.5 times more than independent and voluntary sector provision (note 6).

More importantly, however, large-scale withdrawal from council contracts places the continuity of care for people is at risk and has a destabilising effect on the local social care workforce. Councils must address underfunding properly and develop more flexible commissioning practices which reduce total demand and maintain viable local markets.


Notes for editors

1. 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.

2. Mears Group announced termination of contracts with Liverpool City Council and Wirral Council.

3. Warren Care Ltd announced withdrawal from its contract with Wirral Council

4. Department of Health (2016) Care and support statutory guidance, paragraph 4.31.

5. United Kingdom Homecare Association (2016) A Minimum Price for Homecare.

6. Analysis of HSCIC data for England for 2013-14 (the most recent figures available). Councils’ in-house services cost £39.10/hour, compared to £15.30 per hour cost of services provided by independent and voluntary sector providers. See:

7. A high resolution royalty-free image of Colin Angel, Policy Director is available for use.

8. 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

Registered in England, No. 3083104.

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