Low fees and living wage policy risk mass exodus of home care providers from market

Providers increasingly turning down or handing back care contracts to councils, finds United Kingdom Homecare Association survey

Hundreds of home care providers will reduce the care they provide or shut up shop completely in the next year, a survey by the United Kingdom Homecare Association (UKHCA) has found.

The survey of 492 providers found less than half (38%) felt confident they would still be trading in a year’s time. A further 11% said they would ‘definitely’ or ‘probably’ have ceased trading by September 2016.

The low care fees paid by councils and a lack of funding for the recently-announced ‘national living wage’ policy were named as the two key factors placing a strain on providers.

The ‘national living wage’, a compulsory wage floor of £7.20 for workers aged 25 and over, will be introduced in April 2016. So far, the government has not announced extra funding for local authorities to help providers meet the additional costs. The survey found that of the providers trading directly with councils (288), 74% would look to cease or reduce their care supply as a result of the policy.

If these predictions were carried out, this would affect 50% of all people receiving care from these providers (including self-funders), according to the UKHCA.

These findings are likely to compound fears already raised by providers that unless the living wage is adequately funded, it will further threaten the viability of the home care market. Any additional funding for the policy will be announced as part of next month’s spending review, which will set government spending limits from 2016-20.

‘Extremely vulnerable’

The survey also found that in the past 12 months 93% of providers had seen a real-terms cut in the fees they received from councils to which they supplied care, despite 74% requesting a rate increase over the same period. A further 20% reported an actual reduction in price compared to the previous year.

There was also evidence of a small number of providers starting to hand back existing contracts for the supply of care. Of the providers trading with councils, 26% had handed back 1,807 people’s packages of care on the basis of insufficient price in the past 12 months and 71% had refused to take on new packages of care for the same reason.

Colin Angel, policy director at the UKHCA, said the low fees and lack of funding for the living wage placed the home care market in an extremely vulnerable position.

He added: “Rapid withdrawal from the home care sector will create an additional burden on under-funded councils, who should be prioritising care for people who reply on home-based care, not dealing with local market failure to which they themselves have contributed.”

The providers in the sample were from both the independent and voluntary sectors and delivered a total of 887,962 hours of care per week to 85,000 people in their own homes.


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4 Responses to Low fees and living wage policy risk mass exodus of home care providers from market

  1. Gerald October 9, 2015 at 8:21 pm #

    The Councils have been working towards this end since 1993 , whats new?

  2. Veronica Jones October 12, 2015 at 10:28 am #

    I have been in the care industry for over 15 years. I love working in this sector, i do hands on care work, I have been a Care Assessor for over 13 years and also into management.

    I can honestly say the care sector is in a crisis. There are no winners.
    Providers are struggling to give quality care on the money that is presently being paid by councils/personalise budgets as low as £12.10p.

    Carers are struggling to give quality care with these 20 minutes, 30 minutes allocated jobs. They are frustrated as they cannot their/their family own basic needs.

    The Elderly and Disable are getting the worst possible care as every one is stressed about these situation. I can honestly say, going to work in this sector everyone is now seeking alternative method. This is becoming too stressful.

    How can any one give quality care, when they are all stress.

    • Steve October 12, 2015 at 4:04 pm #

      Just like the care homes, bleat about inadequate fees…yet remain in business and do so for many years…why? Because its a nice little earner, especially when regulation of the sector is largely ineffective…how do we know this? Because of the incessant examples of abuse cpatured by comncealed video cameras.

  3. Terry McClatchey October 12, 2015 at 5:14 pm #

    What is new is the scale of the issue. The living wage progression sets in place a very predictable set of cost increases that are fixed in time and quantity. The costs to employers are compounded by auto-enrollment pensions and NI contributions that further percentage increases. Decent wages and pensions are deserved by workers at the front end of care but the cost of these improvements is real. Efficency is not the answer as supposed efficiencies of earlier years such as 15 minute visits or not paying staff for travel-time between visits are no longer seen as acceptable. Some smaller providers may not yet have tuned into the pressures about to affect them.