Minimum price of home care to rise by 12% next year, says provider body

Homecare Association says councils and NHS commissioners would have to pay providers at least £25.95 an hour in 2023-24 to cover costs and provide 4% profit, but warns too many commission care at 'far below the true cost'

Pay gap image
Photo: Andrey Popov/Adobe Stock

The minimum price commissioners should pay home care providers will rise by 11.8% next year due to increases in the national living wage and the impact of inflation on services’ costs.

That was the message from the Homecare Association as it announced that the minimum for 2023-24 would be £25.95, up from £23.20 currently.

The umbrella body’s annual calculation is based on the cost of complying with minimum wage legislation, while also paying for care workers’ travel time, mileage costs, other wage-related costs and providers’ operating costs and allowing for a 4% profit.

The association said next year’s rise was driven by a 9.7% rise in the national living wage – the pay floor for those aged 23 and over – and inflation in providers’ operating costs, including “sky-high fuel prices and rising rent, rates and utilities”. The living wage is due to rise from £9.50 to £10.42 per hour.

Councils paying ‘far below true cost of care’

However, the association warned that “too many” councils and NHS commissioners were procuring services at rates “far below the true cost of delivering care”.

Chief executive Jane Townson said: “Persistently underestimating providers’ costs risks diminishing the availability of services, the experience of the workforce, and providers’ ability to comply with the legal requirements placed on them.”

She said low fee rates were led directly to staff receiving “poor pay and terms and conditions of employment” and shortages of workers, as evidenced by the 13% vacancy rate in the sector as of March 2022, above the social care average of 11.7%. Vacancies across adult social care rose by more than half (52%) in the year to March 2022.

At the same time, 94% of directors reported that they did not have sufficient care staff in their areas to deliver services this winter, in response to an Association of Directors of Adult Social Services survey carried out in October and November.

Pay care staff ‘much more than national living wage’ 

In response to the Homecare Association’s minimum price, ADASS chief executive Cathie Williams and its president, Sarah McClinton, said: “This report by the Homecare Association should be a powerful reminder of the human impact that poorly paid social care has on both workers and those drawing on support.

“Care work is highly skilled and all care workers should be paid more than the national living wage. If this were to be the case, we could make some inroads in maintaining the essential workforce needed so that older and disabled people can continue to access support and live life fully.”

However, they warned that the current situation left councils in “the invidious position of having to make decisions about paying providers more to retain staff at the same time as being very aware of the numbers of people waiting for or having insufficient care and support”.

While the government has provided councils and NHS leaders with £500m over the winter months to help speed up hospital discharges – including by funding home care – Williams and McClinton said it was not targeted at “the sustainable care and support that could prevent people from being hospitalised in the first place”.

Migration advisers ‘disappointed’ with government

Meanwhile, the government’s migration advisers have expressed their disappointment at the Department of Health and Social Care’s (DHSC) failure to respond to their call for a minimum rate of pay for adult social care, set at £1 above the national living wage (NLW).

The Migration Advisory Committee made this call in April in a report on adult social care post-Brexit, in which it said that low pay was behind the significant recruitment and retention problems the sector faced.

In its annual report, published this week, the MAC said: “We are very disappointed that the government has not responded to any of our recommendations in the 8 months since receiving the report it commissioned from us. The conditions now faced by the social care sector are unsustainable. Persistent underfunding by successive governments underlies almost all the workforce problems in the sector.

“Higher pay at a premium to the NLW, which the government is instrumental in setting, is a prerequisite to attracting and retaining workers.”

In response to the MAC report, a DHSC spokesperson said: “All care workers were added to the shortage occupation list in February 2022 [making it easier for employers to recruit from abroad], and Skills for Care estimate that, since February, up to 15,000 migrant workers have moved to the UK to take up care worker roles. On top of this, we are also investing £15m to further boost international recruitment opportunities.

“Most paid carers are employed by private sector providers who set their pay and conditions independently, but the government is raising the national living wage by 9.7% to £10.42 an hour for workers aged 23 and over from April 2023, and is working to reduce vacancies.

“The government is still carefully considering the recommendations made by the Migrant Advisory Committee in their review of adult social care and will respond in due course.”

, ,

More from Community Care

3 Responses to Minimum price of home care to rise by 12% next year, says provider body

  1. Julia December 15, 2022 at 5:37 pm #

    If they brought it all in house, so avoiding having to pay a middle man, then the money could go straight to the worker and this would assist with recruitment and retention. Is this too easy a solution?

    • Anonymous December 18, 2022 at 1:59 pm #

      In house pay for care staff is approximately £12.50 per hour for experienced staff. on top of that, training, induction, working conditions, pension etc care all better.

      The solution isn’t affordable. We need to solve the real problem of underfunding by this government.

      The only other way to work towards saving social care is to enhance the payment to micro enterprises and PAs to compensate and make it worth it. But this will negatively affect private providers in the process. At 8 per hour, Business costs need to be addressed, as these are down to the structure of the organisation, so smaller companies will be the way forwards

  2. Not My Real Name December 20, 2022 at 9:08 am #

    “If they brought it all in house, so avoiding having to pay a middle man, then the money could go straight to the worker and this would assist with recruitment and retention. Is this too easy a solution?”

    It’s a good idea, but not a solution.

    You can’t avoid the cost of overheads in home care. Staff need training and managing, rotas need setting, care plans need drawing up, staff go sick or have holidays etc etc.

    The only solution is to increase funding to social care.