Homecare Market Under Threat From Low Council Fees

Independent and voluntary sector homecare providers receiving low fees from local authorities could be forced into withdrawing from care, or going out of business, according to a recent United Kingdom Homecare Association (UKHCA) survey. The findings compound an already critically underfunded care system.

The survey gathered data from a total of 492 homecare providers in the UK, with 63% of them trading with one or more local authorities. Many providers have indicated that they are already forced to hand back contracts for people’s care to their local authorities which purchase them because prices paid are uneconomic.

Strong evidence suggests that the homecare sector faces significant instability over the next year, with 74% of providers trading with councils stating that they would have to reduce the amount of publicly funded care they deliver. This is estimated to affect 50% of all the service users they support.

Only 38% of providers were completely confident that they would still be in operation at the same time next year. According to the survey, 11% of all providers thought that they would ‘definitely’ or ‘probably’ have stopped trading within the next twelve months.

The majority of providers (71%) believe that fee levels would not meet the extra costs when the new National Living Wage of £7.20 per hour when it comes into effect next April. 74% of providers responding said that the extra costs would affect the quality of care if it were not fully funded.

In a warning to local councils that providers’ willingness to bid for new contracts could be at risk, 50% of those with a tender opportunity with a council decided not to bid for at least one of the contracts on offer, because they felt the price the council would pay successful bidders was too low to run a viable business.

Colin Angel, Policy Director at UKHCA said:

“A stable, effective homecare sector is vital to over 883,000 older and disabled people who rely on homebased care each year. The low fees paid by local councils and a lack of funding for the new National Living Wage, places the future of the home care market in an extremely vulnerable position.

“Rapid withdrawal from the homecare sector will create an additional burden on underfunded councils, who should be prioritising care for people who rely on home–based care, not dealing with local market failure to which they themselves have contributed.”