By Simon Bottery, King’s Fund
On the day before the Budget, I held a round table with social care leaders on the government’s ambition for a ‘fair pay agreement’ to raise care worker pay.
This would involve creating a negotiating body, bringing together care providers and unions, to agree higher wages and better terms and conditions for care staff.
“Will the plans happen?”, I asked. The sector leaders were largely positive that they would.
The next day, the Budget loaded care providers with big new national insurance bills. I quickly got a text from one of round-table participants, who wrote: “I wonder what the responses would be if you re-ran that question now?”
From caution to alarm about government social care plans
Fair to say that much of that positivity might have evaporated. Some at the event – mainly social care providers – had already been very cautious, fearing they would be expected to bear the costs of a future increase in pay rather than – as they hoped – having the cost met in full by the Treasury.
So the way in which the Treasury loaded those same care providers with extra staffing cost from increased national insurance contributions (NICs), which, in the worst cases, will make their businesses uneconomic, will have turned up the dial from ‘caution’ to ‘real alarm’.
One large voluntary sector provider, employing 6,000 staff, said the increase in NICs would add £5m to its costs, against a budgeted surplus for the year of just £2.7m.
The owner of a small group of care homes told BBC Radio 4’s Today programme that the measure would increase their costs by £200,000 a year, with the rise in the national minimum wage adding another £500,000.
Chancellor ‘confident’ care services can bear tax rise
The chancellor, Rachel Reeves, was unrepentant. Though “not immune to criticism”, she told the BBC’s Laura Kuenssberg that, despite the costs increases, she was “confident” that care services would continue to operate properly.
She pointed to the Budget providing councils with a 3.2% real-terms increase in available resource in 2025-26, including a £600m grant for children’s and adult social care, as the route through which cost pressures could be met.
It is true that the 3.2% increase in spending power is better than it might have been, even if it doesn’t quite rise to the heights of the “significant rise” called for by the Local Government Association.
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Councils ‘staring at a financial precipice’
However it still leaves many local authorities staring at a financial precipice and in no position to give care providers the sorts of increases they need to cover increasing costs.
Four in five councils are expect to overspend their adult social care budgets this year and directors fear the financial situation will be worse next year. The 3.2% increase is also some way short of the 4% average annual funding increase for NHS England over the next two years.
That has left the sector – providers, local authorities, and people who draw on services – with a sense of dismay at the prospects of real change in social care.
Does the government ‘get’ social care?
The Budget has added to a strong sense that the government doesn’t ‘get’ social care – or, if it does, that it doesn’t see it as in any sense a priority.
They remember that virtually the first thing the new government did was to cancel the introduction of a ‘cap’ on a lifetime care costs and wider charging reforms that were due to be introduced in 2025, in the process saving £1.1bn – more than the £600m promised at the Budget.
Though this was part of a broad package of cutbacks and the cap was by no means universally popular – some councils had already argued publicly for it to be postponed – it was not replaced with an alternative vision for the future of social care.
The best the government could muster was a rumoured royal commission on social care, to report some time in the future.
Benefits of fair pay agreement come at a cost
The one concrete measure that government has promised is the fair pay agreement for care workers. It is a bold proposal and one that would meet an undoubted need – an increase in care worker pay so that the sector could compete for staff with other industries.
That would potentially allow social care to offer more and better support to people, an ambition that is widely shared by government, providers, local authorities and, of course, people who draw on care and support.
But it will come at a cost and, after the Budget, the government now has an even bigger job on its hands to convince the social care sector that they will not be expected to bear it.
Simon Bottery is senior fellow, social care, at the King’s Fund
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Funny kind of ‘independent’ commentary that just glosses over provider agencies, mostly hedge fund super conglomerates, “fearing” cost of fair pay for workers would not as they expected be “fully met” by the Treasury. That is by us the actual tax payers. I could unpick further but the King’s Fund is a serial defender of inequity when it comes to how social care should be funded so I’ll , as no doubt it’s de rigeuer in Think Tanks proclaim, just park it there.
King’s Fund would learn more about sustainable business models if it spent less time junketting ‘leaders’ and lobby groups and setting foot into a corner shop to ask those how they survive against multinational supermarkets with tax breaks they don’t get. No doubt the King’s Fund subscribes to the lazy assumption that as mostly family run businesses low pay is what sustains these. They would be wrong of course. They survive because they respond to what customers want in real time with convenience and prices they can afford to pay. Which begs the question why so called ‘Not For Profit’ providers are always demanding handouts from the government and hiking charges for residents. Could it possibly have something to do with complex bureaucracies put in place by ‘Not For Profit’ providers to sustain pay of Finance Officers, Business Managers and CEOs which mysteriously never show up in the “cost pressures” arguments. I attended a King’s Fund conference once where most of the presentations were about “Business Sustainability” and “Future Proofing Profits” rather than how to provide quality care without relying on subsidies and increasing charges while suppressing wages. So no lectures taken from the King’s Fund here, no sympathy for crocodile tears and scare mongering about closures. What I would listen to is if the King’s Fund mapped honestly who is providing care services, how many are owned by hedge fund backed debt loaded companies, which are off shore registered, which offset tax against accountancy tricks of projected losses and profit warnings. Not all of us social workers are ignorant about these ruses. Stop comparing social care to the NHS. Social Care sits outside of the public sector, the NHS is embedded in the public sector. I like cheese and I like marmite but I don’t go round pretending they are alike.
I agree with Tahin and Alyson for no other reason then because 83% of care provision is run by private companies commercialised by venture capital whose profits go outside the country via offshore bank accounts often through shell companies. Hardship impending claims the King’s Fund but facts don’t back up it’s championing of these providers. Profits of up to 23% a year from an average of charging £5,000 a week. LAs helpless and hapless when it comes to choice because of the stranglehold these companies have on the “market”. Perhaps the King’s Fund could enlighten us why most care homes are located in areas of cheapest property with little regard to maintaining family and friendship networks for vulnerable adults and children. As social workers we deal with the consequences of these parasitic companies. Because we do we aren’t fooled by ‘charities’ and others championing them. More so as it seems they do on the terms and parameters defined for them by profit driven providers. Like most the King’s Fund seems to find little enthusiasm for pointing out that problems in the sector are inherent because of the commercialisation of the sector. I’m just a low grade possibly burnt out social worker but it took me precisely 17 minutes to find the information that substandard buildings are the norm and in children’s provision 1 in 5 homes are rated as requires “improvement” or are “inadequate” Simple if your inclination is improving provision to not only meet needs but to enhance the quality of lives and opportunities. Social workers care about these things because we see the consequences on people. Others might want to occasionally look up from their spread sheet and data analysis cocoons and ponder same.
I’m not a social worker but a health researcher but CC readers might be interested to know that one of the biggest mental health services which has a former SWE chair on its as advisory board and which derives almost all of its revenue from the NHS paid out £35Million in dividends to it’s owners. Needless to add that generally it has critical CQC ratings based on poor care, including bullying and assaults of patients, poor staffing with dirty and unsafe premises. Simone is right, unless Wes Streeting addresses the commercialisation of care money will go into companies I’ll suited to provide the services people deserve. Unlikely of course given Alan Milburn has been brought back to shape future ‘reforms’. I have very little knowledge of social work and even less about social workers so am not knowledgeable about what concerns them but it appears to me that the reporting from Community Care seems insightful.