Home care providers face anxious times with over a quarter in danger of closing

More than a quarter of home care providers are in danger of closure, according to business analysts for BBC Radio 4’s You and Yours programme.

More than half a million people in the UK receive care at home and 80 per cent of this is funded by local authorities, with each authority paying a different amount for care.

There are nearly 10,000 home care providers in the UK. The research looked at 2,731 home care operators in the UK and found 715 of them (26 per cent) are at risk of going out of business, with each operator on average having £38,000 worth of debt.

The sector has combined debts in excess of £100m due to years of underfunding from councils and additional costs because of the pandemic this year.

Rob Gready, manager from Eclipse Homecare told the BBC: “Everybody is anxious. We have had high levels of absence in the first wave and I’m extremely worried we’ll have high levels of absence now.”

Mr Gready said his company was losing 72 pence an hour for every state funded local authority client. Now this has increased to nearly £1.40 with all the extra costs coming through.

“We are only able to survive because we got a very healthy self-funded market so there is cross-subsidisation and that is wrong as it does put us under tremendous financial pressure.”

Care providers are 'living life on a knife-edge'

The United Kingdom Homecare Association (UKHCA) calculates the minimum price for home care this year should be £20.69. This is to be compliant with the national legal minimum wage of £8.72 and the care regulations.

Having analysed data from 139 out of the 152 local authorities, UKHCA found currently the median is £17.20. Thirteen councils are paying less than £15 an hour which the UKHCA says doesn’t even cover the national minimum wage.

Colin Angel, UKHCA policy director, said: "The most straightforward answer is that councils need to understand and pay the real cost of care. We calculate that as £20.69 for this financial year. It’s really at the lowest price care can be delivered.

“We’re still not seeing councils recognising the true cost of care. Until that happens, and they are adequately funded by central government, we’ll continue to see some home care businesses winding up and closing their doors.

“[Care providers] are living life on a knife-edge. We really need care providers focussing on delivering fantastic care during the pandemic [and] not worrying about money and the accessibility of PPE which has been the biggest exacerbators to an already weak financial system in social care.”

Mr Angel has also warned if companies do close, there will be fewer care providers available to deliver care and waiting lists will become longer with people looking for care.

He added: “Organisations that may exit the sector will do so in an organised way. There won’t be organisations just disappearing overnight. But this will have a backlog on the NHS.

“Government has already passed legislation which requires councils in England to fund social care providers responsibly, but it does not check whether these duties are being carried out. The forthcoming Spending Review provides an opportunity to address funding for next year, but a long-term funding solution is urgently needed.”

'The nearest puff of financial wind will blow them away'

Business risk adviser Nick Hood, from Opus Business Services, who did the research for the BBC said: “We found 28 per cent of the companies had assets of £25,000 or less which means the nearest puff of financial wind will blow them away.

"These companies have been struggling for years and now this hits them. They need to be resilient to come out the other side, and when you look at their finances - the one thing they don't have is resilience.”

The Association of Directors of Adult Social Services (ADASS) recently called for an extra £1.2bn to support the home care sector over the coming winter months.

A Department of Health and Social Care spokesperson said: "The government has made £4.6bn available to local authorities so they can address the pressures on local services caused by the COVID-19 pandemic."