Homecare Association Responds to the Autumn Budget

FOR IMMEDIATE RELEASE 

The Homecare Association is deeply worried about the impact of the Autumn Budget on homecare services. Whilst it is positive in principle to see a rise in the National Minimum Wage (NMW) to £12.21 per hour, an increase of £600m in the social care grant is nowhere near enough. Many small providers cannot afford the extra costs of higher pay and an increase in employer’s national insurance.

The state purchases 70-80% of social care services. Staffing comprises 70-80% of costs of care delivery. Unlike other businesses, care providers cannot increase prices because public bodies dictate these.

Our research shows only 1% of councils and NHS bodies are buying homecare at fee rates which enable compliance with this year’s NMW of £11.44 per hour. Some are paying less than direct staff costs at the NMW, an average of £19.90 per hour. In August 2024, we calculated a funding deficit for homecare of £1.08 billion to cover the NMW of £11.44. Many care workers cannot be receiving the NMW now. Announcing another unfunded hike in the NMW will not change this.

Many councils are so cash-strapped they are driving down fee rates and encouraging unregulated care. This favours unethical or inexperienced providers willing to bid for work at £18 per hour. Ethical, good-quality providers are being squeezed out of the market.

Councils, NHS bodies and multiple regulators appear to be turning a blind eye, which is a national scandal.

Dr Jane Townson OBE, CEO of the Homecare Association, said: 

“The Chancellor has increased costs for providers without providing enough funds to cover them. As usual, the government is leaving social care out in the cold whilst coddling the NHS. Those relying on services might lose their care. 

“Without access to homecare, individuals suffer and put more pressure on already scarce and expensive health services. It is morally wrong and a false economy.

“Many small providers are already close to the brink, running on wafer-thin margins. These decisions risk sending many over the edge.

“Demand for homecare is rising. Ability to keep and recruit care workers in the UK is falling. 

“Without investment, increasing the minimum wage and implementing the Employment Rights Bill will not improve retention and recruitment of care workers. Indeed, it risks many care workers losing their jobs. 

“Allowing public bodies to commission and purchase care in an unethical way is scandalous.

“The government must reform social care and invest to ensure ethical commissioning, purchase, and provision.

“Ministers cannot fix the NHS without also fixing social care. Social care contributes £68 billion to the economy annually and employs more people than the NHS. Yet the sector faces rising costs and a chasm in funding that threatens harm to those in need.

“We call on the government to walk the talk, invest in social care, and put Home First.”

The Homecare Association calls on the Chancellor to:

1. Provide a multi-year funding settlement for social care to meet future demand and cover the full cost of care (estimated £18.4 billion needed by 2032/33).
    
2. Implement a National Contract for Care services that establishes a minimum price for homecare. This will ensure public sector commissioners pay the full cost for good quality care. 

[ENDS]

Contacts

Dr Jane Townson OBE, CEO, Homecare Association
Email - [email protected]
Mobile number - 07393 012 113

Notes to editors 

1. The Homecare Association is the UK’s membership body for homecare providers, with over 2,200 members nationally. Our mission is to ensure that homecare receives the investment it deserves, so all of us can live well at home and flourish within 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.

Critical funding shortfall

1. There is no sign of proper investment in homecare. The government claims to prioritise prevention. Instead, it is still pouring billions into crisis management of hospitals.
    
2. Local authorities in England face an estimated £4 billion funding gap over the next two years, according to the Local Government Association. One in four English councils will struggle to balance their books unless they receive government help within the next two years. Many councils spend at least half their budgets on social care.
    
3. Current fee rates for state-funded homecare remain dangerously low, with only 1% of contracts meeting the minimum sustainable rate of £28.53 per hour.
    
4. 6% of contracts don’t even cover the £19.90 required for direct employment costs at the current minimum wage of £11.44 per hour.
    
5. Our calculations show the homecare sector needs £1.08 billion more per year just for currently purchased homecare hours at the NMW of £11.44. Two million people have unmet care needs.
    
6. The National Minimum Wage will increase by over 6% to £12.21; Real Living Wage to £12.60; and London Living Wage to £13.85 per hour. The gap between funding and actual costs is widening perilously.
    
7. Many providers will be unable to afford the costs of higher pay and 1.2% increase in employer’s national insurance.

Impact on self-funders

1. With providers dealing with higher costs, self-funding individuals may face fee increases. Can many afford this when their own financial resources are under pressure?