Unfunded rise in minimum wage would further destabalise care market, warns ADASS

Social care leaders say significant funding is needed for local government to manage increase in minimum pay rates in April

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The government’s plans to increase the minimum wage will “further destabilise already fragile care markets” if it is not adequately funded, the Association of Directors of Adult Social Services (ADASS) has warned.

From the beginning of April, the national minimum wage for workers aged 21 to 24 will rise from £7.70 to £8.20 an hour (a 6.5% rise)  while the national living wage, which applies to those aged 25 and over, will rise from £8.21 to £8.72 (a 6.2% hike).

However, while sector leaders have welcomed higher wages for low-paid care staff, they said it was vital that government adequately funded the impact on social care.

Government must make “significant commitment” to funding

ADASS president Julie Ogley said: “This [announcement] recognises the skilled and compassionate work that care workers undertake each and every day to support some of the most vulnerable members of our communities.”

However, she warned: “If [the] government does not provide additional funding, then this will further destabilise already fragile care markets with a clear impact on those of us who need care and support.”

She added: “Prior to this announcement, our autumn survey found that nearly all directors (94%) say that have little or no confidence that they will be able to deliver their statutory responsibilities for care market sustainability by the end of 2020-21.”

The Conservatives have promised an extra £1bn a year for social care sector for every year of the new parliament, which is due to run until the end of 2024, matching what govenment has provided for the current year. If that funding is distributed based on councils’ current approach, the money would be split fairly evenly between adults’ and children’s services.

Additional £1bn ‘not enough”

Prior to the announcement of the rise in the minimum wage, sector commentators warned that the £1bn was insufficient to tackle demand pressures in adult social care.

Speaking before the election in December, Richard Murray, chief executive of think-tank the King’s Fund, said: “The additional £1bn to give short-term boost to social care services for both adults and children is not enough to meet rising demand for care while maintaining the current quality and accessibility of services.”

The national living wage (NLW), introduced in 2016 at £7.20 an hour, has helped push up wages for care workers, with average pay rising by 27p per hour each year since its introduction compared with 14p per hour in the four previous years, according to Skills for Care’s latest report on the state of the workforce. As of March 2019, when the NLW was £7.83 an hour, median pay for a care worker in the independent sector in England was £8.10 an hour.

However, Skills for Care also found that the NLW had led to compression in pay in the care sector, with wages for the poorest paid staff rising much more quickly than those earning more. Also the pay gap between those with more than five years’ experience and those with less than a year’s experience halved from 2017-19, from 26p to 37p per hour to 15p per hour.

This led the sector workforce development body to say that it would be “challenging for employers to continue to reward workers with higher levels of experience, greater responsibilities, or those who are more qualified that are already paid above the NLW rate”.

Social care in for ‘tough financial year’

Colin Angel, policy director of United Kingdom Homecare Association (UKHCA), said he feared the social care sector was in for another “tough financial year”.

“Pay rates which attract workers to the home care sector and reward them for the vital work they do is a high priority for home care providers, who, in many parts of the country, already have to pay well above the national living wage to be competitive within their local labour market,” Angel said

“Whilst government has said that it wants to fix social care, so far it has failed to address long-term funding.”

He added: “We therefore have little confidence that central government will recognise these costs for state-funded home care this year.”

Angel said while it was likely to be another tough financial year for the state-funded sector, providers to the self-funded home care market would be able to pass the additional costs onto the people they support.

He warned that without more courageous funding from central government, councils would be forced to “squeeze the amount of care people receive”.

“Intelligence on the intentions of local authorities so far suggests that many councils will also fail to increase providers’ fee rates to meet the increased costs,” Angel said.

“Regrettably, there will continue to be more providers handing back contracts to councils because the fees paid are simply unsustainable.”

Professor Martin Green OBE, chief executive of Care England, said that if government fails to support this uplift, then services may close, jobs will be lost and support to people in need will be reduced when more people need social care.

“Good and fair wages remain a lynchpin in the future sustainability of the adult social care sector. So too does the delivery of quality care to some of society’s most in need, but is in incumbent upon Government to ensure that such increases in the National Living Wage are reflected in the fees paid to care providers who are supporting some of society’s most vulnerable people,” Green said. 

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