The need to reduce market instability in social care is urgent

by Colin Angel

Concerns are mounting over homecare providers withdrawing from local authority contracts. This is serious: homecare services are fundamental to supporting local communities, enabling people to remain at home (as most older people wish to) and enabling many family carers to remain in employment.

Economically, the homecare sector in England also provides employment to over 527,000 people, who pay taxes and spend money in their local community.

The latest annual budget survey by the Association of Directors of Adult Social Services (ADASS) revealed that 48 English councils had experienced one or more providers ceasing trading in the previous six months, and 59 councils had at least one provider handing back contracts. Together, these market failures affected 7,640 people supported at home.

More recently, BBC’s Panorama programme reported that 95 of 197 UK councils had experienced contract hand-backs from homecare providers. Warwickshire councillor Izzi Seccombe, commenting on behalf of the Local Government Association, described independent and voluntary sector providers as having been pushed to the brink of collapse as a result of an historic underfunding of adult social care, increasing demand and the additional costs of the National Living Wage.

Leaving the marketplace

Exits from the state-funded market are a warning of a serious problem. The dominant model of purchasing homecare, based on payments for hours of care delivered, should incentivise providers to deliver service in volume. When providers begin to leave the state-funded market, it indicates that existing contracts have become commercially unsustainable. It is my view that these are the early signs of a more serious departure from the state-funded market which needs to be addressed urgently.

Many homecare providers are already making tough decisions about the viability of contracts they hold with councils, based on their assessment of the rates councils are willing to pay.

Factored into these decisions are the costs of delivering services and the increasing difficulty of recruiting sufficient care workers on the terms and conditions that local authority contracts permit.

It is apparent, from the letters I see from many councils to their providers, that there’s a significant lack of understanding of the costs of care, and often a lack of willingness to engage with providers to find common ground through open and transparent costing exercises.

We strongly urge commissioners and procurement teams to read new guidance on the costs of care, written jointly by local government and provider associations and published by public finance experts, CIPFA.

In 2016, UKHCA published an extensive analysis of the rates which councils were paying for homecare and compared this with the minimum price which we believe home care can be delivered in a sustainable way. Just one in 10 councils were paying UKHCA’s minimum price at the time. While there will have been some price uplifts since then, providers have also faced a further increase in the cost of the National Living Wage.

Make or break

Recruitment and retention issues in social care are not just about money and wages, but there is a definite relationship between the funding of care and the range of terms and conditions that can make or break social care as a career option.

Commissioning very short homecare visits, with an unrealistic expectation of care that can be delivered within the time, creates working patterns that are neither satisfactory for the person using support, nor the care worker. Low rates paid for care also reduce employers’ ability to create career structures that reward workers’ development and training.

Interestingly, zero-hours contracts do not seem to be as unpopular for the majority of care workers – many do not opt for a guaranteed hours contract when offered – but even so, where councils wish to see a reduction in zero hours contracts, the price paid for care must reflect the employers’ costs of running such a workforce.

When care providers decide to exit or reduce their services to councils a range of options are available. These include: complete withdrawal from a contract; handing back packages of care which are significantly more costly to deliver than the fee will support; or continuing to supply under the current contract but planning not to retender for that business when the contract comes to an end.

Each of these options will inevitably place an additional strain on local authorities, which will have to re-allocate packages amongst existing providers or reprocure services.

We are also seeing providers that are willing to continue supply to councils, but not on the agreed contract rate. While councils are not obliged to purchase, it is becoming a reality for some that it is the only way to secure the capacity they need in some parts of the country. This should not be a surprise, particularly if providers have self-funders willing and able to pay the full costs of care.

Orderly transitions

Where providers are considering handing back contracts to local authorities, it is vital that they understand the terms of their existing contract, taking legal advice when necessary. We encourage organisations to explain the rationale for terminating the contract, so that the authority understands the rationale for the commercial decisions made.

Providers should also allow sufficient time for an orderly transfer of service uses to an alternative provider to ensure the protection of people supported and to ensure that TUPE regulations can be followed.

Sometimes it is possible to find a solution to withdraw from the contract, and we encourage providers to outline any terms which, if met, would change their decision. In this case, urgent resolution is essential, because contract transfers can be extremely unsettling for the workforce, and staff turnover can increase dramatically during periods of uncertainty.

The need to reduce market instability is urgent. A lot of time is being spent on thinking about designing new models of care. This thinking is important, but must not become a diversion from addressing the immediate problem. The Spring Budget brings around £2 billion to the social care sector in England. This funding must not be used solely to try and buy more services are the current inadequate rates. It needs to be used to stabilise local markets.

Colin Angel (@colintwangel) has been the policy and campaigns director at the United Kingdom Homecare Association (UKHCA) since 2004.