EMBARGOED UNTIL 00:01 Monday 17 March 2025
The Homecare Association welcomes this new National Audit Office report on Skilled Worker visas. We support the call for cross-government collaboration to address skill shortages. This must address underlying causes. Immigration can complement domestic initiatives to address skills shortages but is not in itself a solution. The current immigration system ignores the operational realities of the homecare sector. It is, therefore, unworkable and unhelpful. We also endorse the recommendations for the Home Office to understand and publish an assessment of the impact of immigration and rule changes. It is shocking they have not already done so.
The report highlights the scale of exploitation in the care sector, with about 34,000 people affected by revoked sponsor licences. The Homecare Association condemns labour exploitation in all its forms.
The government believes immigration changes and the Employment Rights Bill will protect care workers from exploitation. They will not. New legislation will serve only to increase non-compliance. Exploitation flourishes in a system where:
- Most local authorities and NHS bodies pay below-cost rates for homecare and do not guarantee work to providers;
- Zero-hour commissioning for contact time only is the norm, with short-notice cancellation without fees, and insufficient money to pay for travel time or training;
- Councils fragment work among too many providers, so none have enough volume to be sustainable;
- Councils auction homecare to the lowest bidder with little regard for safety or quality;
- Councils move people’s care to cheaper providers without warning or discussion;
- Regulation is under-resourced and ineffective.
Dr Jane Townson OBE, CEO of the Homecare Association, said:
"The exploitation of care workers isn't primarily an immigration problem. It's the inevitable consequence of a broken funding and commissioning system. Some councils and NHS bodies are buying homecare at rates as low as £16.12 per hour; the UK average is just £23.26 when £32.14 is needed. These rates don't even cover direct staff costs at the national minimum wage, never mind contributing to other running costs. We have what can only be described as state-sponsored labour exploitation, driven by underfunding and unethical commissioning of homecare by councils and the NHS. Lack of effective regulation compounds the problems.
"The plight of sponsored workers has shone a spotlight on the labour exploitation many UK homecare workers have experienced for years. It's a symptom, not a cause. You cannot solve this through visa restrictions or employment legislation alone. What we need is a cross-government approach that fixes how care is funded, commissioned, purchased, and regulated. Without this, we're simply shifting deck chairs on the Titanic while those giving and receiving care and support continue to suffer."
We call on the government to ensure:
- Sufficient funding to pay fair rates for care that enable fair pay and compliance with employment and care regulations
- A National Contract for Care Services with legally binding minimum fee rates
- An end to zero-hour commissioning and a move to shift-based purchasing
- Properly resourced regulation with effective enforcement
- Better coordination between the Home Office, the Department of Health and Social Care, regulators, local authorities and care providers
We urge the government to act on all the report's recommendations and work collaboratively to create an immigration system that genuinely addresses workforce challenges while protecting those that cannot protect themselves.
--ENDS-
Contacts
Media team
Email: [email protected]
Mobile: 07435 910 654
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.
