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NHS is Putting Homecare Providers at Risk of Failure Through “Unethical” Commissioning

The Homecare Association have accused some NHS Integrated Care Boards (ICBs) of “unethical commissioning practices”. Grossly inadequate fee rates and late payments risk quality, safety and sustainability of homecare provision. Without immediate intervention, the government’s promises to reduce NHS waiting lists will fail because the social care services it depends on will fail.

A letter to NHS England’s CEO, Amanda Pritchard, criticised some ICBs for failing to increase fees after the National Minimum Wage (NMW) increased by 9.8% in April 2024. Now providers face a further 10% rise in costs because of an increase in employment tax and a 6.7% increase in the NMW announced in the Autumn Budget. You can read the letter here.

Homecare Association research published in August 2024 revealed 75% of NHS bodies had failed to communicate with providers about fee uplifts by June 2024, three months after the minimum wage increase.

The letter comes amid warnings that the UK’s care sector has reached a “tipping point,” with evidence showing only 1% of public bodies are paying sustainable rates for care services. Industry analysis reveals that 80-85% of providers are small and medium enterprises which lack the financial resilience to absorb rising costs without corresponding fee increases.

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

“The approach of the NHS to commissioning homecare is nothing short of scandalous. Some ICBs haven’t spoken to providers about fees since 2023, let alone offered increases to cover mandatory wage rises. They expect homecare providers to operate below cost, putting both care workers and older and disabled people at risk.”

“When public bodies pay rates as low as £17 per hour for homecare – less than direct staff costs at the minimum wage with statutory on-costs – they increase risks of poor and unsafe care and create the conditions for labour exploitation. The NHS should be concerned about the safety and well-being of those receiving and giving care and support, but all they’re bothered about is saving money. Without urgent action, we face the very real prospect of widespread provider failures that will devastate care provision and pile even more pressure onto an already strained NHS.”

The Homecare Association calculates that providers need a Minimum Price for Homecare of £32.14 per hour for 2025-26 to ensure sustainability and compliance with regulations.
This comes as recent market analysis shows homecare providers’ average margins have fallen from 10.8% to just 7.6%. Many are operating on margins of 1-2% or at a loss.
We urge ICBs to engage with homecare providers to understand their costs and provide fee uplifts to cover them.

The Labour government claims to want fair pay for care workers. They must therefore ensure public bodies pay a fair price for care.

The Homecare Association are calling on the government to:

1. Invest at least £2.8 billion in the care sector, of which £1.8 billion is needed in homecare, to mitigate the risks of failure. Evidence shows that every £1 invested saves £3 in longer-term costs across the health and care system.
2. Exempt care providers from changes to employer’s national insurance contributions.
3. Ensure 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)
4. Implement a National Contract for Care service that sets a minimum price for care services. This will ensure public sector commissioners pay the full cost of quality care.