FOR IMMEDIATE RELEASE
Today’s immigration changes announced by the government reflect a concerning disconnect between immigration policy and the realities of homecare provision in the UK.
While we share the government's commitment to protecting workers from exploitation, these new requirements will further exacerbate recruitment challenges for homecare providers already struggling with an unsustainable commissioning system.
The fundamental issue is that councils and the NHS purchase 79% of homecare services at rates that don't cover costs. They fix prices (averaging just £23.26 per hour when £32.14 is needed), pay only for contact time, fragment the hours between too many providers, and many auction care to the lowest bidder with little regard for quality.
This commissioning approach prevents providers from meeting sponsorship requirements. With zero-hour commissioning and no guaranteed work volume, providers cannot offer the secure, full-time employment that visa sponsorship demands. The new requirement to pay a minimum salary of £25,000 per year (or £12.82 per hour) further widens this gap, particularly when council fees often do not even cover minimum wage costs.
Dr. Jane Townson OBE commented:
"The government is imposing immigration restrictions without fixing the broken commissioning system that makes stable employment impossible. This is a politically expedient move that fails to address the underlying problems in homecare.
If ministers want to prevent exploitation, they must address why councils and the NHS are paying homecare providers as little as £16.12 per hour. You cannot legislate for better working conditions while simultaneously underfunding the services expected to provide them."
The requirement to recruit from the pool of workers who have lost sponsorship overlooks complex realities. Many have suffered trauma because of exploitation, job loss, or homelessness. Some require significant support and reassurance before they can return to work. Meanwhile, providers—already operating on razor-thin margins—are understandably cautious about hiring workers who may be dealing with these challenges, especially with the forthcoming Employment Rights Bill introducing day one rights. This leaves providers with even less flexibility to support vulnerable workers through transition periods.
Additionally, the geographic distribution of these displaced workers rarely aligns with care needs. Homecare is inherently local, yet available workers may be hundreds of miles from where care is needed.
The solution isn't further immigration restrictions, but fundamental reform of how homecare is funded, commissioned, procured and regulated.
We call on the government to:
- Provide sufficient funding to councils so they can pay fair prices for care, enabling providers to offer fair pay and working conditions.
- Establish a National Contract for care services, setting legally binding minimum fee rates that enable compliance with employment and care regulations.
- Require councils and the NHS to end zero-hour commissioning and move to shift-based purchasing of homecare, allowing care workers to be paid for shifts.
--ENDS--
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Notes to editors
1. The Homecare Association is the UK’s membership body for homecare providers, with over 2,200 members nationally. Its mission is to ensure homecare receives the investment it deserves, so all of us can live well at home and flourish in our communities. The Homecare Association acts as a trusted voice, taking a lead in shaping homecare, in collaboration with partners across the care sector. It also provides hands-on support and practical tools for its members. The Homecare Association’s members agree to abide by the Association’s Code of Practice.
2. The care sector comprises 18,500 PAYE employers, 10,850 of those are non-residential and 7,650 are residential (Skills for Care 2024). Total market value is £35.3 billion (LaingBuisson 2024), contributing £68.1 billion to the economy.
3. Local authorities and the NHS buy 70-80% of all care services (LaingBuisson 2024).
- 96% of supported living.
- 89% of care homes for younger adults.
- 79% of homecare.
- 57% of older people’s care homes.
4. NHS funding represents 25% (£1,692 million) of the total funding for homecare (£6,656 million). The rest comes from councils (50%; £3,348 million); direct payments (3%; £212 million); private-pay (21%; £1,375 million); and other (1%; £30 million) (LaingBuisson 2024).
5. The fee rates local authorities and the NHS pay now are too low to cover costs (Homecare Association). Only 1% meet our Minimum Price for Homecare of £28.53 per hour in 2024-25. This will rise to £32.14 per hour in 2025-2026, as detailed in our new Minimum Price for Homecare report.
6. Employment costs, representing 70-80% of providers’ total costs, will surge by at least 10% in 2025-26. This is driven by increases in employers’ national insurance contributions and minimum wage requirements. We provide detailed analysis in our Minimum Price for Homecare 2025-26 report.
7. Providers cannot pass on these increased costs as local authorities and NHS bodies, their primary customers, fix prices. Many councils cannot balance their books and directors of Adult Social Services must cut budgets by £1.4 billion.
8. Key findings from a recent Care Provider Alliance survey show that without immediate government intervention:
- 73% will have to refuse new care packages from local authorities or the NHS.
- 57% will hand back existing contracts to local authorities or the NHS.
- 77% will have to draw on reserves.
- 64% will have to make staff redundant.
- 92% of providers who also serve people who pay for their own care will be forced to increase rates for self-funders. Many self-funders will be unable to bear extra costs and may reduce care or rely more on family carers.
- 22% are planning to close their businesses entirely.
9. Profitability in the state-funded sector has plummeted over the past decade (LaingBuisson 2024).
- Homecare average EBITDA margins have fallen from 10.8% to a low of 5.2% in 2019, with some recovery to 7.6% in 2024.
- Care homes for younger adults have seen EBITDA margins halve from 26% to 13%.
- Older people’s care homes serving mainly state-funded residents have seen margins fall by 50%.
10. Despite some perceptions, private equity involvement in the care sector is limited. Just 12.2% of older people’s care homes; 10.1% of younger adult care homes; and 12.2% of homecare/supported living services are private equity backed.
