The recent Health and Social Care Select Committee’s report shows the real-life impact of austerity within the care market over the last ten years and the increasing demand on all services across the country.
The report, which is based on the insights of care experts including people who provide and use services, offers a moment of reflection on the shape of future care delivery.
The funding issue
The bedrock of all service delivery is tied to money and the flow of funding via the different routes that people pay for their care. One of the main recommendations within the Committee’s report is for Government to use the forthcoming spending review to invest £7bn more per year in adult social care by 2023/24.
Yet we know from the detailed funding analysis by the Health Foundation that this is a minimum step towards covering future care costs within our society, falling around £700m short of what would be required to meet increased demand, increase provision and support local authorities to pay providers more sustainable fees.
The social care system relies on cross-subsidy arrangements between people paying for their own care and those whose care is funded by their local authority. The National Audit Office report on adult social care updated in 2018 shows that this subsidy can be significant, with private care fees on average 40% higher than those paid by the local authority. This leaves providers commercially exposed or forced to pass on their operating cost shortfall to self-funded individuals.
Compounding financial strains
In evidence to the Health and Social Care Select Committee, the Local Government Association (LGA) identified a sizeable in-year gap of £6bn attributable to the impact of COVID-19 across the sector. This is over and above the £3.2bn funding that was provided in the earlier part of this year by the Treasury to local councils. LGA and CPA both agree that this first £3.2bn was insufficient to cover the additional costs associated with the COVID-19 pandemic. The Infection Control Fund rounds one and two have topped up some key financial gaps, but what we now face through the winter months is providers and councils struggling to balance their budgets.
The financial problems will continue to mount with the recent announcement that the zero-rate on VAT for PPE for providers has ended. All providers will be impacted by this 20% increase on purchases outside the PPE Portal allocations. Providers that are not registered with the Care Quailty Commission (CQC) will be further materially impacted by this as they are not able to access any of the free PPE via the portal.
As well as the increase in infection control costs, services are facing falls in occupancy levels as families are concerned about placing loved ones in residential care. Recent figures from Carterwood show the 2020 monthly loss of care homes beds has risen to 1,500, three times that of last year’s average. Rises in staff sickness and absences are also leading to increased agency costs.
On top of this, the adult social care market is largely made up of charities who operate on a limited profit model, as their values often see them reinvesting within their services or running at a loss. The picture for these charities is bleak.
The latest Voluntary Sector Impact Barometer report shows that:
- Almost 40% of voluntary organisations report that their financial position had deteriorated in the last month.
- 60% say COVID-19-related safety measures have increased their operating costs.
- 10% expect to have stopped operating by this time next year.
It is difficult to quantify the true extent the impact this pandemic has had and will have, however it does not seem unreasonable to assume that currently at least 50% of the whole adult social care market will be in a precarious financial situation. This is directly attributable years of underfunding, compounded by the budget impacts of the COVID-19 pandemic.
Our market fragility could be further exacerbated by the sleep-in judgements; we understand that in some cases, reserves set aside for back-pay may have already been used by providers in commercial distress. One more pressure on cash flow will be the final straw.
The adult social care market is large; comprised of approximately 18,200 organisations across 38,000 locations, with a workforce of 1.52 million.
It is estimated to contribute £41.2bn per annum to the economy in England. In 2019/20, the total wage bill for the sector accounted for around half of this amount at £22.2bn (up 2% from 2018/19). We consistently hear from our members that care workers are typically deeply committed to their work and enjoy working with the people they meet, whilst undertaking what can be a very difficult job well.
The values of staff are certainly a driver in this sector, but it would be naïve to say that pay isn’t a significant consideration – we all need to pay the bills at the end of the month – and despite some recent improvements in recruitment, the Skills for Care workforce report revealed that we still need over 100,000 care workers to come into the sector.
To fill this gap, not only will we need to attract new workers, but we will also need to reduce the 30% turnover rates typical in the sector, which will require a long-term, strategic approach to social care pay and conditions. Care work should not be compared to a job in a supermarket, yet doing so allows us to see that retail staff, on average, earn 24p more per hour than a care worker, raising concerns about the wider issues on pay. This must be addressed.
The adult social care sector in England is a major employer and contributor to the economy and, as such, investment in the workforce should be a priority at a national level. However, prioritisation is not what we see from Government. Care workers are not listed as an eligible occupation on the ‘Skilled Workers’ route of the new points-based immigration system, due to come into effect from January 2021, and despite calls by the Migration Advisory Committee to add senior care workers to the Shortage Occupation List, issues with recruitment have not been heeded. Without support to improve conditions, the sector will now need to fight even harder to attract new staff.
This situation, amongst other issues, has led CPA to call for a long-term Social Care People Plan – similar to the NHS People Plan.
We want to see parity with our colleagues in the NHS, in terms of recognition as a skilled workforce, and in terms of reward through comparable pay and conditions. We want to see structured career pathways so that working in care is an attractive profession for everyone with the right values and commitment.
We want to ensure that instead of 20% of care workers being paid the National Living Wage, all care staff are paid the Real Living Wage (currently £9.30, and £10.75 in London), the cost of which has been calculated by the Resolution Foundation as £1.4bn per annum.
And research shows that the public supports this. In May 2020, the gender equality campaigning charity the Fawcett Society, found that 65% of survey respondents supported an increase in Income Tax to fund a pay rise for care workers, a figure that rose to 68% among Conservative voters. The Fawcett Society said, ‘The case for making a sustained investment in social care has never been stronger – the toll the pandemic has taken on this sector means that social care is no longer a hidden problem, but one that the country as a whole understands. We urge the Government to now address this crisis as a matter of urgency.’
The time to act
We can all make a change to the small part of the system within which we operate and advocate. The overarching structure of our sector requires collaborative policy development with providers, reform that is centred around the voices of the people we serve and the funding overhaul to achieve these strategic aims within a long-term sustainable plan.
The CPA and all the national trade associations we represent would echo this quote from Sir Andrew Dilnot: ‘We have a system that does not work, does not look after the people who need it well, does not look after those who are providing the care well and does not provide an industry that is attractive to move into. ‘Reform is due now. It has been due for many years, but now seems like a really appropriate time to act.’
Join the Better Pay for Social Care Campaign
Right now, we are campaigning for better pay across our social care workforce. Initiated by the ARC member Autism at Kingwood, and supported by the Care Provider Alliance, we hope that the Better Pay for Social Care Campaign will be adopted by other bodies and social care providers, so that we can work collaboratively to effect change for our incredible social care work force.
We are calling on individuals and organisations to sign up to and publicise this 38 Degrees petition on Better Pay for Social Care.
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