HOW CAN THE SECTOR ADDRESS ITS CONCERNS ABOUT INCREASING LABOUR COSTS?
Wage watch
Since April 2023, the National Living Wage (NLW) has risen to £10.42, an increase of 92p or 9.7%. From a homecare perspective, the Homecare Association calculates that the cost of recruiting and retaining staff represents the largest financial aspect of delivering homecare services, approximately 70% of total expenditure.
In addition, the Homecare Association reports that wage increases cause the cost of other financial obligations including statutory pensions, National Insurance, holiday and sick pay to increase in turn.
Publicly funded care
Government’s Autumn Statement announced funding of up to £2.8bn in 2023/24 in England and £4.7bn in 2024/25 for social care and discharge. Part of this package has been allocated to local authorities ‘to make tangible improvements to adult social care’, such as addressing low fee rates and workforce pressures.
Despite this, analysis from the Economics Observatory suggests that rising inflation rates experienced by local authorities and providers since Government’s Autumn statement threatens the extent to which the funding will bolster the sector financially.
Given rising costs, the analysis argues that fewer care packages will be allocated using the funding than first thought, and that there will be less money than anticipated for providers to address increasing labour costs.
Agency staff
The latest figures from Skills for Care state that there are approximately 165,000 vacant posts in the sector in 2021/22. This is an increase of 55,000 or 52% since 2020/21. Faced with increased workforce shortages, providers are turning to agencies to provide temporary staff to fill the gaps.
Unfortunately, this resource often comes at a price, with a recent Care England survey finding that 86% of respondents reported that the costs of nurse and carer agency staff were challenging for their organisation, and 84% reported having to pay ‘higher’ or ‘significantly higher’ rates compared to full-time staff.
Fair Cost of Care
In September 2021, Government shared its intention to provide funding to local authorities to enable them to pay providers fees that cover the actual cost of delivering the service on their behalf. This, the Fair Cost of Care Fund, sets out to move away from the practice of local authorities paying providers low fees as a result of budget constraints, and the differential in fee rates charged to some self-funders in order to cover the shortcomings of local authority fees.
On paper, the fund should result in providers being able to allocate more money to address increased labour costs. However, the Nuffield Trust has highlighted three main concerns that may stand in the way of the fund’s establishment – complex provider and council collaboration, doubts about the funding’s sufficiency and uncertainty concerning council capacity to administer
the funding.
Cash alternatives
A research report examining the implementation of the Real Living Wage in adult social care surveyed sector employees who reported that non-financial factors also contributed to job satisfaction and wellbeing. Good shift patterns, advance notice of work rota, training opportunities, professional development and career progression were all well received by respondents to the report’s survey. With labour costs undoubtedly increasing, placing pressure on providers’ finances, can providers explore innovative ways to retain their workforce and make people
feel valued?
We are at a crossroads in social care. We all know staff deserve to be paid more and to be recognised for the highly skilled and compassionate work they do, but there is a point about basic economics many services struggle with.
With a 17% rise in the National Living Wage over the last two years, and operators managing significant price hikes in energy, consumables and food, there is no doubt many care recipients have seen fee increases that have done more than raise eyebrows.
Local authorities have, to a degree, recognised the pressures on the industry, but few providers will argue that revised fees will cover anything like real costs. Indeed, 92% of care providers are now citing staff costs as the main pressure they are facing1.
The 2023 Sector Pulse Check report cites one third of providers having considered exiting the market in the past 12 months, so how do we stem the tide? I think we have three opportunities:
We must reflect the real cost of care in the fees we charge. For those yet to increase fees in 2023, give clear explanations of why charges must increase. This applies to local authority fees too – if you pay the Real Living Wage, ask what mitigations your local authority offers for providers like you going above and beyond.
It isn’t just about money. What do you do, or what can you do, to show your staff how you value them? A nurse told me recently she hadn’t expected a pay rise in the current climate; she was delighted enough with the ‘small extras’ – a thank you voucher, an Easter egg and just feeling part of a great team. Paying our staff the Real Living Wage has helped, but an extra day off for birthdays has been a real winner.
Show why you are worth it. With the Government continuing to kick sustainable future care funding way into the long grass, we must continue to shout about the value that social care brings to our care commissioners and future care recipients.
Far too few people with a microphone are using it to champion social care. Grab your microphone – in your meetings with commissioners, through positive social media stories, with your staff. Let’s show why fair social care funding matters.
Reference
- Sector Pulse Check, Hft and Care England Analysis by CEBR, March 2023
Ruth French, Operations Director, Stow Healthcare and Non-Executive Director, The Outstanding Society @StowHealthcare
The care sector is facing a significant challenge with increasing labour costs and it is vital to address this to ensure the sustainability of the sector. The pandemic has exacerbated the problem, resulting in staff shortages and high staff turnover rates.
As a care consultancy, Kata Care has extensive experience in staffing and consultancy services, which can help address the concerns of increasing labour costs. Our experience has shown that implementing effective strategies with the help of sector experts can significantly reduce labour costs and improve the quality of care provided.
One key strategy is to invest in internal recruitment training to help care providers identify and retain suitable staff. By training recruitment staff, they can improve their ability to select and onboard the right candidates, reducing the cost of staff turnover and ensuring a stable workforce.
Another effective approach is ongoing quality monitoring. By regularly monitoring the quality of care provided, it is possible to identify areas for improvement and provide the necessary training and support to enhance the skills of care staff. This can help to improve the quality of care, increase job satisfaction and reduce staff turnover. Moreover, mock CQC inspections help care providers identify areas for improvement and implement changes to ensure they meet CQC requirements. This can help reduce the risk of costly compliance issues, improve staff performance and enhance quality of care, which can also lead to increased fees or funding.
Additionally, technology plays a significant role in reducing labour costs. Care providers can invest in software to streamline care delivery and reduce administrative burdens on care workers. This helps reduce the number of staff required, ultimately reducing labour costs. Consultancies can support with the implementation, as well as navigating the Adult Social Care Digital Transformation Fund.
We need to take a holistic approach to address the increasing labour costs. Care consultancy can play a crucial role in helping care providers to identify and implement effective workforce planning strategies, training, ongoing quality monitoring, mock CQC inspections and technology adoption. By addressing this issue head on, the care sector can ensure it continues to provide high-quality care to the most vulnerable members of society, while also improving the job satisfaction and retention rates of its workforce.
Fae Mell, Managing Director, Kata Care
@faemell