Care Act 2014: Councils struggling with ‘market sustainability’ duty

Diminishing resources and concerns about the stability of the sector are leaving councils grappling with commissioning reforms, says ADASS

Ray James, president of the Association of Directors of Adult Social Services. Photo: ADASS

Councils are struggling to implement commissioning reforms introduced under the Care Act, directors have warned.

Ray James, president of the Association of Directors of Adult Social Services, told Community Care the duty placed on councils to ensure a sustainable care market was ‘exercising’ directors due to the tension with existing pressures in the sector.

“The Care Act strengthens the responsibilities of local authorities as commissioners around market sustainability and people are grappling with how do we balance that and do it with reducing resources and the difficulties around sustainability of the sector as a whole,” he said.

‘Sector at risk’

The Care Act requires councils to ensure there are enough high quality providers and services for people to choose from in their local area.

This includes understanding the true costs of care, ensuring providers are paying care staff the national minimum wage and for the time spent travelling between calls, and working with providers to minimise the risk of unexpected failure.

The legislation also requires councils to consider the impact of their own commissioning practices and not take any actions that could threaten the sustainability of the sector.

But James said “wherever we look” there are concerns around financial sustainability and issues such as the quality of services, high turnover of nurses in care homes and the announcement of the ‘national living wage’ policy are all putting pressure on the sector.

“Who doesn’t think that the things we ask frontline care workers to do they deserve to be paid at least £9 an hour for?” he said.

“But until the government give greater certainty about whether they are going to fund councils to be able to meet the cost of it, it’s adding risk in the sector.”

‘Provider instability’

James was speaking to Community Care following the publication of the fourth Care Act stocktake, the first to be carried out since the legislation took effect in April 2015. It was undertaken in May and answered by all 152 local authorities in England.

On market sustainability, the stocktake found more than two thirds of councils (68%) had contingency plans in place to manage the collapse of a major care provider. A further 17% said the plans would be in place by July and 15% said by or later than September 2015.

More than half of councils (58%) reported a ‘robust and comprehensive’ understanding of the fair costs of care in their local area and 70% said they had put in place arrangements to assure themselves that providers were paying staff the national minimum wage.

But 68% of councils also reported ‘the impact on the local provider market’ as one of the main risks they faced in delivering the Care Act reforms.

Care market costs, staffing and provider instability were also listed as concerns alongside inadequate funding and uncertainty around future cuts.

‘Sharper focus’

“The concerns are about how on earth do we ensure a sustainable market in the context of the level of funding reductions councils have had in the last few years,” said James.

“The market sustainability is much more in the place of ‘we need some help to be able to do this [compared with some of the other reforms].”

But the ADASS chief added that the difficulties councils reported around market sustainability and their commissioning responsibilities were a “tension that should be in the system”.

“I think the reforms have brought commissioning practice that is not as good as it should be into sharper focus. Councils shouldn’t be able to ignore it and they should be commissioning responsibly, but the government needs to play their part in funding responsibly too.”


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3 Responses to Care Act 2014: Councils struggling with ‘market sustainability’ duty

  1. David Gaylard August 25, 2015 at 8:59 pm #

    This shift from public to private care originally started under the NHS & Community Care Act 1990 creating a ruthless ‘marketization’ of social care compelling local authorities to commission 60% of their services with the private sector.

    What is significant to also highlight is that the majority of UK care providers are now predominantly private equity or privately held companies with 4 out of the 5 providers managing to accumulate healthy (i.e. huge) profits for their shareholders. Publically published accounts reveal that Four Seasons Healthcare: £64.1m profit (2013-14), HC One: £21.3m made a loss (2013-14); Care UK: £20.8m profit (2013-14), Barchester: £12.8m profit (2013-14) and Bupa: £175m profit (2013-14).

    Although It has been mooted by the Resolution Foundation it may cost up to £2.3bn by 2020 to facilitate the national living wage isn’t about time both national government and local authorities finally grasp this nettle and pay a living wage?

    As David Cameron has already reneged upon his pre-election promise to honour the ‘care cap’ costs from 2016 (enshrined in the Care Act, 2014) having now delayed this until 2020.

    • Terry McClatchey August 27, 2015 at 11:39 pm #


      the figures you qote might give the impression that provider profitability is the source of a solution to pay the living wage. The companies you mention however make most of their profits from private payers. They sometimes offer discounted rates to LAs if they need to keep occupancy up. If their bed price rises (or they withdraw from the market) and LAs can’t pay the increased rates per bed, the gap between publicly and privately funded care will widen further.

  2. Terry McClatchey August 26, 2015 at 5:02 pm #

    Without a clear strategy for implementing the living wage (+ percentage consequentials for national insurance and mandatory auto-enrolement pension costs) the market for most social care services in most parts of the country is simply unsustainable.