Today (20 January 2020) UKHCA announces its new calculation for the Minimum Price for Homecare of £20.69 per hour, effective from 1 April 2020, when the UK’s statutory National Minimum Wage and National Living Wage will increase (notes 1 to 3).
The new minimum price covers the minimum legally compliant pay rate for careworkers (excluding enhancements for unsocial hours working), their travel time, mileage and wage-related on-costs. The rate also includes the minimum contribution towards the costs of running a care business at a financially sustainable level (note 4).
UKHCA’s Minimum Price is widely recognised within the social care and health sectors in all four UK administrations. Indeed, councils in England are directed to UKHCA’s methodology in paragraph 4.31 of the Care and Support Statutory Guidance, published by the Department of Health and Social Care (note 5).
The breakdown of the costs included in the new minimum £20.69 hourly rate based on the statutory National Living Wage are: (note 6)
- Careworkers’ contact time: £8.72
- Careworkers’ travel time: £1.70
- Employers’ contribution to NI & pensions: £1.14
- Other wage on-costs: £1.97
- Careworkers’ mileage: £1.36
- Cost of running the business: £5.20
- Providers’ profit or surplus: £0.60
A number of councils and NHS commissioners will state that local conditions influence the costs of care in their area. Although this is true, local conditions are likely to mean that the costs are higher (rather than lower) than UKHCA’s Minimum Price for Homecare. This is because our rate is calculated on the minimum legal pay rate, which is unlikely to enable employers to recruit sufficient careworkers from their local labour market.
UKHCA regularly reviews the assumptions used to create our Minimum Price. The latest version includes: the statutory wage increases for workers; an increased assumption for funding statutory sick pay; and an increase in the different costs of regulation in each of the UK nations.
The costs of running a care service (at least £5.20 per hour from April 2020) are also strongly influenced by the requirement on providers to meet legal obligations to ensure the safety and wellbeing of the people they support (note 7).
UKHCA strongly cautions local authority and NHS commissioners against under-estimating costs in a bid to reduce the total hourly price paid for care. A cost-saving approach which effectively ‘salami-slices’ the different elements of providers’ costs is taking risks with the quality and safety of a regulated service. It also risks undermining the ability of providers to improve the working experience of careworkers, thereby further destabilising the workforce.
UKHCA has also calculated the equivalent rates needed to meet the (voluntary) UK and Scottish Living Wages and the London Living Wage, as follows:
- Non-statutory UK Living Wage: £21.99 per hour
- Non-statutory Scottish Living Wage: £21.99 per hour
- Non-statutory London Living Wage: £25.11 per hour
Announcing today’s publication, UKHCA’s Policy Director, Colin Angel, said:
“Councils and the NHS must recognise the true costs of homecare. Paying providers fees which in some cases barely cover the costs of the wage-bill continues to destabilise an already fragile state-funded market.
“Persistently underestimating providers’ business costs is taking a risk with the quality of services, the experience of the workforce, and providers’ ability to comply with the legal requirements placed on them.
“UKHCA will continue to challenge central government on the overall funding of social care. However, it is local authorities and the NHS, which are responsible for determining the prices they pay for homecare services at a local level.”