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More than a quarter of homecare contracts offered by English local authorities do not cover the cost of employing staff on the minimum wage, according to an industry body that said the practices amounted to “state-sponsored exploitation”.
The Homecare Association, which represents 2,200 providers across the UK, said 27 per cent of local authorities were paying hourly rates below £22.71, the bare minimum it says is needed to cover statutory employment costs such as wages, training and travel time. This left “less than nothing” for other regulated operating costs, it added.
Jane Townson, the association’s chief executive, said low fee rates were “enabling modern slavery” and meant that ministers’ plans to introduce a Fair Pay Agreement in the sector, with an hourly minimum wage of £13 to £15, were “a fantasy”.
Care providers are angry that they are being blamed by ministers for exploitative practices within the sector that they see as the inevitable consequence of underfunding.
Under changes to immigration rules announced last month, care providers will no longer be able to recruit overseas workers, following widespread evidence that the visa route opened in 2022 was abused by employers who were unable to offer work on the terms promised.
The government wants to drive up pay and standards in the sector by introducing a new mechanism for sectoral collective bargaining, underpinned by its workers’ rights legislation.
But a review of the sector’s long-term funding, set in train by the health secretary Wes Streeting, will not conclude until 2028. Meanwhile, spending review negotiations over funding for local government are going to the wire, against a backdrop of tight fiscal constraints.
The Homecare Association warned a fresh squeeze in council funding would lead more providers to drop out of the publicly funded care market. It wants ministers to ringfence social care budgets, inject extra funding and also overhaul local authority commissioning practices — so that providers serve a cluster of clients in a small geographical area, cutting staff costs and travel time.
More than half of care providers planned to hand contacts back to local authorities or NHS trusts in the year ahead because of the shortfalls in fee rates, the Association said, and almost three quarters were unwilling to accept new publicly funded care packages.
Three quarters of local authorities had offered uplifts in fees that fell short of April’s 6.7 per cent increase in the minimum wage, its research found, and only two out of 123 local authorities had given uplifts bigger than the 10 per cent cost increases providers faced.
A government spokesperson said it was committed to tackling the challenges facing social care and had provided a funding boost of up to £3.7bn for social care authorities in 2025/26. It said it was also introducing a fair pay agreement “so care professionals are recognised and rewarded”.
