Social care industry at breaking point due to planned increase in national living wage

TV viewers fell in love with Derek, the kind care worker portrayed by Ricky Gervais, who looks after the elderly residents of the Broad Hill nursing home.

Yet Kent care bosses say jobs for people like the loveable Channel 4 character are under threat from cuts to funding and an increase in labour costs from the national living wage due in April next year.

The county’s care industry is at breaking point according to Adam Hutchison, who represents about 200 care providers across the county as an executive board member of the Kent Integrated Care Alliance.

He said private care homes will close if local authorities do not provide more money and claims the cost of caring for residents allocated through social services has been underfunded for more than a decade.

Mr Hutchison, who is director of Belmont Sandbanks Care Group, which operates homes in Romney Marsh and near Hastings, said his company receives £408.48 per patient per week from Kent County Council.

Yet his private fees for residential care range from £550 to £650 per week.

In East Sussex care homes receive £496 a week while in Hampshire the figure is £574.

In west Kent, the figure increases to £440.30.

The situation has been made worse by increases in the cost of workers.

“We need to increase what is funded by central and local government to accommodate the increase in labour costs forced on us by government...” - Adam Hutchison, Kent Integrated Care Alliance

Over the last 10 years the national minimum wage has gone up from £5.35 in 2006 to £6.70 last month, an increase of 25%. Another 6% increase will be introduced in April when the government introduces its £7.20 national living wage.

However, the Kent County Council rate for supporting residents in care homes has risen by only 5% since 2008 – with the additional cost swallowed by private businesses.

The latest increase in the national minimum wage at the start of October is expected to cost Mr Hutchison’s business £26,000 in increased labour costs. The introduction of the national living wage in April is due to up that by another £70,000.

He claims government payments need to increase by £20.52 per week per person just to stand still, with that due to increase once the living wages comes into effect.

Mr Hutchison, who employs more than 75 people, said: “As a sector we are all for the national living wage because people don’t get paid enough.

“However, how are we able to fund that? We are constantly under pressure to improve quality but we are at breaking point in care.

“The private market subsidises the social services market. Those who pay privately will have to pay more than those who come through social services.

“We need to increase what is funded by central and local government to accommodate the increase in labour costs forced on us by government.”

“We have got the national living wage and all the pressures it brings, which is probably more than the impact of the amount which can be raised through council tax..." - Cllr Graham Gibbens

“If this doesn’t happen, the short term result is independently run businesses in Kent, small family-run providers,will begin to exit the market and decide to build houses on their land or look at another form of business on the site.

“Then there will be a knock on for employment, with the long term effect larger national providers will come in and be able to charge what they want.

“We’re not trying to plead poverty but we are under pressure as a business sector.”

In the Autumn Statement on Wednesday, Chancellor George Osborne announced plans to allow councils to put council tax bills up by 2% provided all the money was used to help fund social care.

Kent County Council cautiously welcomed the move.

Cabinet member for adult social care & public health Graham Gibbens said: “The announcement was only recent and it is too early to give a forensic analysis.

“The big issue is how the 2% is going to be used but I do welcome it.

“The Government has recognised that social care does need to be funded.

“We have got the national living wage and all the pressures it brings, which is probably more than the impact of the amount which can be raised through council tax.

“One of the big things we need to do is encourage people to stay at home as long as they can and avoid going into residential care..." - Cllr Graham Gibbens

“As a local authority we have a duty to ensure there’s a vibrant social care market and we have a duty to ensure there’s appropriate funding to the sector.”

He said he would have been “very disappointed” if funding was cut and hopes to be able to increase funding in the future.

He added: “One of the big things we need to do is encourage people to stay at home as long as they can and avoid going into residential care.

"We have been quite successful at keeping people out of residential care but as people get older many do not have any other option.

“How we manage that is an issue.”

He has also approved plans to force KCC to pay the same amount to social care providers wherever they are in the county, which comes into force next year.

Paying for your care costs – Be cautious about giving away your property

A blog by Dr Brian Sloan, a legal academic specialising in family and property law.  In this blog, Brian comments on the delayed cap on care costs and cautioning against giving away your property prior to going in to care.

The delay in the cap on care costs

The Care Act 2014 facilitates a cap on the amount that any one individual in England is expected to contribute towards his or her social care costs. This would be a contrast to the current situation, whereby someone with assets (sometimes including a home) of more than £23,250 can be expected to meet the full costs of care. In July 2015, however, the Government announced that the cap would be delayed until April 2020.

Limitations on the effect of the cap on care costs

It is important to realise that there were to be several significant limitations on the cap’s effect even before it was delayed, as I discuss in this paper. These are:

1 – the cap was to be set at the high level of £72,000 in April 2016.

2 – it was to cover only the cost of meeting ‘eligible needs’, broadly equivalent to ‘critical’ or ‘substantial’ needs under the pre-Act system, and not ‘low’ or ‘moderate’ ones, leaving much to depend on the outcome of local authority assessments.

3 – costs counting towards the cap were likely to be based on what it would cost the local authority to provide the relevant care, which may be below what an individual would pay for that care.

4 – the cap would exclude ‘general’ or ‘daily’ living costs in a care home, which were likely to be around £12,000 per year.

Your property

Whatever the cap’s limitations, it would have left some people with more property to leave to their family and dependants, and might have reduced the risk that the social care system would impose an ‘individual and excessive burden’ in a particular case, breaching the European Convention on Human Rights’ protection of the right to peaceful enjoyment of possessions.

The Local Government Association have said, however, that ‘local government funding will…be under enormous pressure in the coming years as Departments make…savings as part of the Government’s deficit reduction plan’, and any diminution in the funding entering the care system risks prejudicing those who cannot afford to pay for care.

The significant continuing liability to pay for social care might tempt people to give away their property in anticipation of care costs.

Be wary of giving away your property before you go in to care

But, as I suggest in this paper, caution is required. Aside from the need to ensure that a potential care recipient keeps enough property to support him- or her-self, local authorities have wide powers to reverse the effect of disposals of property for the purpose of reducing liability to pay for care.

They can do this either by deeming a care recipient still to have property of which he or she has deprived herself, or by pursuing the recipient of such property. While the Government’s guidance to local authorities considers it ‘unreasonable to decide that a person had disposed of an asset…to reduce…charges for their care…if at the time…they were fit and healthy’, this is not obvious from the legislation itself.

If you are looking for ways to pay for your care costs, there is a useful guide here as to the alternative options to property you can consider.

What will happen next?

It remains to be seen whether and when the cap on care costs will be implemented. Even if it is given effect, however, it will not remove the controversy surrounding paying for social care in a context where health care is generally provided free at the point of delivery.

@briandsloan and http://www.law.cam.ac.uk/people/academic/bd-sloan/409