Survey shows sector on brink of failure due to sleep-in pay crisis

May 8, 2018

A new survey reveals that the viability of nearly 70% of the care sector is threatened by the sleep-in pay crisis.

The independent survey, conducted by Agenda Consulting and Towers & Hamlins LLP, assessed the impact of sleep-in pay on the future of the care sector. It highlighted the potential rate of collapse in care services – finding that 30% of people are likely to have their services disrupted in the next year as providers are forced to hand back contracts.

The survey also shows:

  • The care sector is drastically underfunded.
  • Only half of commissioners of care services are paying the National Minimum Wage (NMW) for care workers on sleep-in shifts.
  • The sleep-in back pay bill will make the majority of care providers unviable.
  • An overwhelming majority of care providers have not budgeted for the back pay bill.
  • Some providers will be forced to sell homes which provide care for disabled people, while others will be forced to end services in some regions.

Already the sleep-in pay crisis is affecting care services. According to the survey, providers have decided not to bid or negotiate for 273 new contracts because of their financial situation directly related to sleep-in back pay.

Worryingly, nearly half (46%) of providers who responded to the survey would have to make redundancies, with 19.7% of staff facing redundancy. Those hit hardest by any redundancies would be those occupying frontline delivery posts. This effect on frontline staff will undoubtedly hit those cared for.

As one survey respondent stated, 'All I ever wanted to do was make a positive difference and its heart-breaking to think what changes may lay ahead for [the people we support].'

Key findings in detail

  • The care sector is drastically underfunded: 67% of those who responded expect to have a budget shortfall in the coming financial period, with 62% planning to fund the shortfall through reserves. Out of those considering different approaches to address the potential shortfall in funding, 70% are considering a renegotiation of contracts with commissioners, and 56% are considering handing back services.
  • Only half of commissioners of care services are paying NMW for care workers on sleep-in shifts: The results of this survey show that there has been a significant rise in the number of services the commissioners have agreed to fund at the NMW in the last year from 14% to 49%. However, only 7% have agreed to fund sleep-ins at the NMW together with all on-costs.
  • The sleep-in back pay bill will make the majority of care providers unviable: 34% of those surveyed said that there would be a threat to the viability of their organisation if there's a requirement from HMRC to backdate payments to staff for two years, with this figure rising to 68% if the requirement is to back date for six years (as is required by current government guidance).
  • Providers have not budgeted for the sleep-in back pay: Only 6% of providers have budgeted for back pay liability.
  • Due to the sleep-in pay crisis providers will be forced to sell properties which previously housed disabled people requiring care: 22% of those surveyed said that they would have to sell properties to cover the shortfall.
  • Due to the sleep-in pay crisis providers will be forced to end services in some areas: Providers have decided not to bid or negotiate for 273 new contracts because of their financial situation.

Reacting to the survey results, Rhidian Hughes, Chief Executive of the Voluntary Organisations Disability Group (VODG), said, 'This research confirms what many of our members have been saying for the past two years. This should not only worry the Government, but also the hundreds of local authorities, clinical commissioning groups and community NHS services that rely on these providers to deliver such vital services for vulnerable people.

'The social care sector is facing an existential threat caused by sleep-in pay which is entirely due to unclear and changing Government guidance. Being hit with an unexpected liability for back pay is unfair to the people who rely on care, but also care workers, local authorities and providers of these crucial community services.

'The solution is simple: Government must fund all care work, including sleep-in shifts, at the NMW and pay the back pay owed to care workers for the past six years.

'Government rightly funds care services for our most vulnerable citizens – and over the last six years has not funded them at the NMW. Now, they must rectify their mistake. The care sector should not be forced to pay for a Government error – particularly when the future of the sector is in jeopardy.

'Social care has been underfunded and undervalued for years. Now with the sleep-in pay crisis coming to a head, this may well be the final straw which forces disruption to care services throughout the UK if not outright collapse.

'If Government cannot find a solution by September, we are worried that negative effects to care services will increase dramatically.'

Tracy Hammond from Learning Disability England said, 'Care services allow people to live their lives. Any cuts or funding gaps will undoubtedly affect the people they serve.

'Those who depend on care services are already marginalised and this survey proves that the sleep-in pay crisis will result in vulnerable people having less choice and less control over their care – unless a solution is found quickly.

'We urge the Government to fund the back pay liability and ensure proper funding for the care sector moving forward.'

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A week of sleep-in action - Care Management MattersCharities call for action on the sleep-in crisis - Care Management MattersAndrew Dykes Recent comment authors
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Andrew Dykes
Andrew Dykes

Some providers, us included, saw the problem coming and increased pay for sleep-ins years ago, or switched to waking night shifts, to comply with the law. It was also the right thing to do for the staff, even if it lead to funding arguments with purchasers. Others gained a competitive advantage by illegally paying their staff too little. Why should they even ask for compensation?

The sector’s funding problems are enormous, but they won’t be solved by taking advantage of employees and then demanding more money when caught out.


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