10% pay rise for thousands of care workers as government announces national living wage rise

Many thousands of care workers in England will get a 10% pay rise next April after the government decided to increase its national living wage (NLW) from £10.42 to £11.44 an hour.

The NLW will also be applied to staff aged 21 and 22, raising their wage floor from the national minimum wage (NMW), which is currently worth £10.18 an hour.

As of March 2023, about 140,000 care workers in the independent sector in England (17% of the total) earned the then NLW of £9.50, according to Skills for Care’s latest report on the workforce.

10% pay boost for thousands of staff

This suggests a similar number of care staff will receive the full 10% increase next April, which is well above the current annual inflation rate of 4.6% and will be worth £1,800 a year in cash terms for full-time workers.

Many more care staff, earning between £10.42 and £11.43 will also receive a significant pay rise on the back of next year’s NLW increase.

Skills for Care’s data showed that about 400,000 care workers in England (47% of the total) earned between £9.50 and £10.41 as of March 2023, meaning they would have received a pay rise when the NLW rose to £10.42 earlier this year.

Two years of real-terms pay cuts for care staff

The prospect of an inflation-busting pay rise will be welcome for care staff after two years of real-terms wage cuts.

Average real pay fell from £10.66 to £10.08 an hour for care home staff, and from £11.11 to £10.50 an hour for domiciliary care staff in the two years to March 2023, according to Skills for Care’s data.

The erosion of care worker pay has exacerbated workforce instability, with adult social care vacancies rising by 52% in 2021-22 before falling slightly in 2022-23, on the back of increased overseas recruitment.

However, there are significant questions about whether councils and NHS commissioners will be able to fund providers sufficiently to meet the new NLW, alongside meeting their other employment and operating costs.

Provider body Care England’s chief executive, Martin Green said: “While the rise in national living wage has an undeniably positive impact on those working within adult social care, due consideration must be lent to care providers who will need to grapple with increased workforce costs again, against a backdrop of local authority funding struggling to keep pace.”

£900m deficit in provider fees estimated

In a report last week, the Homecare Association estimated there was a gap of £893.4m between the amount English commissioners paid domiciliary care providers and the fees required to pay staff the current NLW of £10.42.

The finding was based on comparing data from 99% of councils and 52% of NHS integrated care boards (ICBs) against the association’s the minimum price for home care, which was £25.95 an hour in England in 2023-24.

This is based on providers paying the NLW, meeting other statutory employment obligations, funding workers’ travel time and mileage costs, financing operating costs and making a 4% profit.

The association found that just 5% of commissioners in England paid the minimum price, with commissioners paying an average of £21.59 an hour, weighted for the different volumes of care purchased by different bodies.

Commissioning practices criticised

The association also raised concerns about the ongoing practice of commissioners purchasing care by the minute, which it said risked people’s visits being cut short, and staff not being paid for their travel time.

Regulations require that staff pay rates cannot be pushed below the NLW or NMW, as appropriate, once travel time is taken into account.

While being critical of commissioners, the association said the root cause of the issues was inadequate government funding.

“Inadequate central government funding for home care has led to poor practices in the commissioning and purchasing by public organisations,” the report concluded. “In turn, this has led to poor pay and terms and conditions for the workforce, which is a root cause of insufficient workforce capacity to meet need.”

DHSC defends record on funding

In response, the Department of Health and Social Care defended its record on funding social care, citing the up to £8.1bn it had made available to authorities from 2023-25 to meet current pressures, though not all of it is for adults’ services. The funding comprises

• £3.2bn extra through the existing social care grant, though this is for both adults’ and children’s services, with an expected 40% due to be spent on the latter.
• £1.6bn to tackle delayed discharges, with the funding split between councils and NHS integrated care boards.
• £1.6bn through increasing the adult social care council tax precept by 2% and raising standard council tax by 3% in each year.
• £1.08bn through the market sustainability and improvement fund, designed to help councils increase provider fees, tackle waiting lists and boost recruitment and retention.
• £570m through a separate market sustainability and improvement fund – workforce fund, which has the same objectives but is particularly focused on tackling staff shortages.

“We are grateful for all the work that homecare providers and their staff do, as part of our wider social care sector,” said a DHSC spokesperson.

“The market sustainability and improvement fund (MSIF) and the MSIF workforce fund – backed by nearly £2 billion – include a focus on workforce pay and will allow local authorities to make improvements to adult social care services.

Extra resource welcome but insufficient – ADASS

However, the Association of Directors of Adult Social Services said the extra resource, while welcome, was insufficient.

Joint chief executive Cathie Williams said: “Extra funding from the government this year to help recruit and retain social care staff has been welcome, but as a result of high levels of inflation and increasing need, this report shows it’s not enough to solve the fundamental problem that we don’t have the resources in adult social care to provide competitive pay and conditions to the 1.5 million people working in care in England, supporting older and disabled people stay independent and do things that matter to them.

“And that means it’s difficult to recruit and retain staff, with 152,000 job vacancies in care, over half a million hours of homecare were not able to be delivered to older and disabled people last year due to not having enough staff.”

Higher pay in Scotland, Wales and Northern Ireland

Care workers in Scotland, Wales and Northern Ireland in publicly commissioned services are currently paid a minimum of £10.90 an hour, in line with what was, until recently, the UK real living wage (RLW).

This is set by campaign group the Living Wage Foundation, is voluntary and is based on the cost of living.

Last month, the foundation increased the UK RLW to £12 an hour.

The Scottish Government has pledged that care staff in commissioned services in will receive at least this wage from next April, with Wales and Northern Ireland likely to follow suit.