Care charities fear bankruptcy and withdraw from contracts due to sleep-in crisis

08 May 2018 News

More than two-thirds of care providers in the UK fear that government back-pay demands for sleep-in shift workers could make their organisation unviable, with many already withdrawing from contracts, leaders warned today.

The sleep-in shift crisis facing care providers, many of which are charities, is due to the government demanding they pay sleep-in shift workers, previously paid a flat-rate fee of about £30, the full National Minimum Wage (NMW).

There are concerns for care organisations funding for these workers going forward, while some have also concerned they will be forced to back-pay workers previously paid the flat rate.

An independent survey commissioned by the Voluntary Organisations Disability Group (VODG), which received about 90 responses, found that 68 per cent said there would be a threat to the viability of their organisation if they were made to pay six years’ back-pay to sleep-in shift workers historically paid below the NMW.

While a third of those surveyed said that there would be a threat to their organisation’s viability if they were forced to pay only two years’ back pay.

Only six per cent of providers said they have budgeted for any back-pay liability.  

Some 46 per cent of providers said they would have to make redundancies if they received no more funding, with 20 per cent of staff at these organisations facing redundancy. VODG said the majority of these are likely to be on the front line.

Some 22 per cent of providers said they will be forced to sell properties which previously housed disabled people requiring care.

Withdrawing from contracts

Two-thirds of respondents expected to have a budget shortfall in the coming financial period, with the majority of these planning to fund the shortfall through reserves.

Others facing a shortfall said they were considering renegotiating contracts with commissioners or handing services back. Some 22 per cent said they would have to sell properties to cover the shortfall.

Providers have already decided not to bid or negotiate for 273 new contracts because of their uncertain financial situation.

The survey found that there has been a significant rise in the number of services the commissioners have agreed to fund at the NMW in the last year from 14 per cent to 49 per cent.

However, only seven per cent have agreed to fund sleep-ins at the NMW together with all other ongoing costs.

'Outright collapse'

Rhidian Hughes, chief executive of VODG, said: “Government rightly funds care services for our most vulnerable citizens - and over the last six years has not funded them at the NMW.

“Now, they must rectify their mistake. The care sector should not be forced to pay for a government error - particularly when the future of the sector is in jeopardy.

“Social care has been underfunded and undervalued for years. Now with the sleep-in pay crisis coming to a head, this may well be the final straw which forces disruption to care services throughout the UK if not outright collapse.

“If government cannot find a solution by September, we are worried that negative effects to care services will increase dramatically.”

Tracy Hammond, operations director at Learning Disability England, said: “Those who depend on care services are already marginalised and this survey proves that the sleep-in pay crisis will result in vulnerable people having less choice and less control over their care - unless a solution is found quickly.

“We urge the government to fund the back pay liability and ensure proper funding for the care sector moving forward.”

Izzi Seccombe, chair of the Local Government Association’s Community Wellbeing Board, said: “The continued absence of new funding to cover historic, current and future sleep-in payments, remains a huge financial risk to social care providers and councils, and is causing continuing uncertainty in the market and widespread anxiety for carers and those who use care services.

“We fully support care workers being paid fairly for the work they do and we urge government to fund the cost of sleep-in payments with genuinely new money, to prevent more care providers going out of business, contracts being handed back to councils, care workers losing their jobs and less investment in prevention.

“Without this it will put further strain on informal carers and impact on the wellbeing and outcomes of those who rely on social care, which will reduce the ability of social care to mitigate demand pressures on the NHS.”

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