One in 10 home care agencies will be forced to close due to National Living Wage

Eleven per cent of all home care agencies have revealed that they will be forced to close within the next 12 months, due to the low fees paid by local authorities.

A survey carried out by the United Kingdom Homecare Association (UKHCA) found that only 38 per cent of home care providers are completely confident they will still be in operation within the next 12 months, with 11 per cent of all providers saying they will ‘definitely’ or ‘probably’ have stopped trading.

Home care agencies claim they have been struggling to provide a home care service on what are already low fees from local authorities.

However 71 per cent of home care providers have now said that when the new National Living Wage of £7.20 an hour comes into effect in April next year, they will be unable to meet the extra costs, with 74 per cent of providers saying the quality of care will be affected if it is not fully funded.

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.”

Many home care providers in order to stay financially sustainable, will choose to offer more privately funded care, with 74 per cent of providers trading with councils stating that they would have to reduce the amount of publicly funded care they deliver.

Many providers say they are already forced to hand back contracts for people’s care to their local authorities which purchase them because prices paid are uneconomic.

The survey also found that half 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.

The UKHCA recently launched a petition on the official Commons petition website calling on the Government to address the home care funding crisis in the spending review in the autumn.

At the moment, over 3,200 people have signed the petition. If the petition reaches 10,000 signatures, the Government will respond to this petition and if it reaches 100,000, this petition will be considered for debate in Parliament.

To view the debate go to: https://petition.parliament.uk/petitions/108789?dm_t=0,0,0,0,0 or to read the full report, visit: http://www.ukhca.co.uk/pdfs/UKHCAMarketStabilitySurveyAnalysisVersion11201509.pdf

There are over 9,100 registered homecare providers across the UK, the majority of which (84 per cent) are in the independent and voluntary sectors. The UKHCA estimates that these organisations employ over 438,000 homecare workers, who deliver over 6.29 million hours of care per week to around 536,000 service users, valued at £5.2 billion per annum.