A growing number of home care providers have been handing back local authority contracts because they are not financially viable.
In a report the UK Homecare Association (UKHCA) said there had been an “apparent increase in home care providers handing back home care contracts to their statutory sector purchasers” because of inadequate fee levels.
UKHCA estimated the average cost of home care in the UK was £16.70 an hour, however, councils across the Britain and Northern Ireland only pay an average of £14.58.
As a result there will be a £513m deficit in state funded home care in 2016-17.
Of 193 local authorities that responded to freedom of information requests, UKHCA said just one in 10 were paying the average price it calculated was needed to provide home care, taking into account the increased cost of the National Living Wage.
“Inadequate fee levels paid to providers illustrate the root cause of unacceptably low pay and conditions of the home care workforce, and genuine risks of underpayment of National Minimum Wage, including the National Living Wage,” it said.
The deficit calculated by UKHCA is larger than the figure of £330m the Local Government Association predicted the National Living Wage would create.
Jane Townson, CEO of Somerset Care, told BBC Radio 4’s Today programme her business had handed back four of the 10 contracts it currently has with local authorities, and was reviewing another two.
She added that the firm had decided not to bid for two new contracts in areas it was already operating in.
Townson said because some local authorities only paid for contact time and not time travelling between clients, the rate did not reflect the true cost of the service.
“We operate in quite a lot of rural areas and its not uncommon for our staff to drive 100 miles on a shift. So that means they might be out for eight hours, but only five of those are actual client contact time,” she said.
Even if the council paid £9 per contact hour, above the National Living Wage, Townson said her company would still be forced find money elsewhere to ensure its wage met the wage standard once travel time was accounted for.
Townson said in one instance a local authority contract was costing the company £100,000 a month, “which as a not-for-profit social enterprise we simply can not sustain”.
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