Health CommitteeWritten evidence from United Kingdom Homecare Association (SC 21)

Executive Summary

UKHCA is the professional association of homecare providers from the independent, voluntary, not-for-profit and statutory sectors. The Association represents over 1,900 member organisations across the United Kingdom. We welcome this opportunity to submit written evidence to the Health Committee’s inquiry into social care.

UKHCA welcomes the recommendations of the Dilnot Commission on Funding of Care and Support. We see it as a crucial step forward to tackling the issue of funding care for our ageing population. However, the Commission has said very little on how we should ensure that there is sufficient and sustainable funding for the current scheme.

UKHCA would like assurance that the eligibility threshold for social care in any new scheme will be set at a reasonable level, and certainly more generous than the very tight eligibility criteria currently operated by many councils. We would also like assurance that the proposed state-funded element will not be based on the current inadequate, and deteriorating, local authority care package.

Any analysis of fees paid by local authorities to independent and voluntary sector providers, and to service users in receipt of direct payments must recognise that independent homecare providers are highly vulnerable to the purchasing decisions of the public sector. Even before the current economic downturn, providers were coming under increasing pressure from local authorities exercised by efficiency savings and reducing costs of services.

UKHCA supports the delivery of more personalised health and social care services across the UK. However, it is important to recognise that there are significant risks and threats for home care providers from the way self-directed support is being implemented by some local authorities. Until now, these have been little acknowledged, but could potentially have important unintended consequences for the sector. At its most extreme, it “could spell large-scale destruction of the sector”.

We believe it would be highly disproportionate for the failure of a large residential care provider to lead to the economic regulation of the homecare sector. What the homecare sector needs is not an economic regulator to monitor its finances, but for councils to pay providers sustainable fees that reflect the true cost of service provision.

UKHCA supports the closer integration of health and social care to better meet the needs of individuals and provide an enhanced patient/user experience. We believe that integrated services are necessary to meet the increasing demands of an ageing population, especially in this time of economic austerity.

Recommendations made by The Dilnot Commission and Law Commission

1. UKHCA is the professional association of homecare providers from the independent, voluntary, not-for-profit and statutory sectors. The Association represents over 1,900 member organisations across the United Kingdom. We welcome this opportunity to submit written evidence to the Health Committee’s inquiry into social care.

2. UKHCA welcomes the recommendations of the Dilnot Commission on Funding of Care and Support. We see it as a crucial step forward to tackling the issue of funding care for our ageing population. We believe that the Commission has come up with workable proposals which promise sustainable care services for the future and clearly identify the balance of responsibility for the cost of care between the individual and the state. However, we believe that much more detailed work needs to be done on how the proposals will work in practice.

3. UKHCA agrees with the Commission that additional public funding for the current scheme is urgently needed. However, the Commission has said very little on how we should ensure that there is sufficient and sustainable funding for the current scheme. The whole focus of the Commission’s report is the future funding of long-term care.

4. The Commission has recommended that eligibility for social care should be set nationally and, until the current assessment system is replaced, the threshold should, at a minimum, be set at “substantial”. However, this will leave large numbers in need without state support until any new measure is developed. It is estimated that around 450,000 older people in need of care have some shortfall in the formal care they receive, with 275,000 older people with less intensive needs getting no support from their local council.

5. The Commission says that the state-funded care element should be based on a local authority care package, but people will be free to top up from their own resources should they wish. However, most local authorities (72%) only provide care support for those with “substantial” or “critical” needs.

6. UKHCA would like assurance that the eligibility threshold for social care in any new scheme will be set at a reasonable level, and certainly more generous than the very tight eligibility criteria currently operated by many councils. UKHCA would also like assurance that the state-funded element will not be based on the current inadequate, and deteriorating, local authority care package. We would like to see a package of quality care that will enable those with less intense needs to live independently for longer in their homes and communities or in other services of their choice and delay or avoid many becoming dependent on others or the state. We would also like to see the increased use of reablement and preventative care and support.

7. The Commission believes that by capping the overall risk that people will face, new financial products could develop to support people in making their contribution to social care costs. However, it remains to be seen whether the insurance industry will rise to the challenge of providing new products for long term care. Part of the problem in the past was the difficulty of predicting just how much an individual’s care is going to cost, potentially exposing insurance companies to large indeterminate costs.

8. UKHCA has heard conflicting opinions from the insurance industry on the Commission’s recommendations. We have been told that the industry can come up with new financial products to cover the cost of care up to the £35,000 cap. However, we have also been told that the £35,000 is not insurable, principally because the council, and not the insurance company, will be responsible for carrying out the assessment of social care needs.

9. UKHCA supports the recommendations of the Law Commission. We believe it is correct to establish a unified adult social care statute, and that the overarching purpose of adult social care is to promote or contribute to the well-being of the individual. We also support the Commission’s other recommendations, including giving carers new legal rights, placing duties on councils and the NHS to work together, building a single, streamlined assessment and eligibility framework, and giving adult safeguarding a statutory footing.

Charges for Social Care in England

10. Laing & Buisson’s 2009 domiciliary care market survey found that the average hourly charge for one daytime weekday homecare hour in England was £12.89 for local authorities and £12.98 for private purchasers. However, the variation in both fees paid and users’ abilities to access state funding is difficult to quantify.

11. Any analysis of fees paid by local authorities to independent and voluntary sector providers, and to service users in receipt of direct payments must recognise that independent homecare providers are highly vulnerable to the purchasing decisions of the public sector. Over half (55%) of independent providers are reliant on councils for 80% or more of their hours, and one in eight only have councils as hourly paying clients.

12. Even before the current economic downturn, providers were coming under increasing pressure from local authority commissioners exercised by efficiency savings and reducing costs of services. Local authorities’ annual contract price reviews barely recognised homecare providers’ additional statutory costs.

13. Other “cost saving” mechanisms used by local authority commissioners include only paying for contact time (sometimes only by the minute) or using short care episodes of 15 minutes for personal care. UKHCA’s commissioning survey (see below) found evidence that visits of 15 minutes were increasing rapidly, despite being widely discredited as poor practice.

14. In August, UKHCA undertook a study of the commissioning practices of local authorities to understand the impact of local authority commissioning decisions in the context of public spending cuts. It found that 82% of councils and health and social care trusts were reducing the number of hours of care they would pay for individual service users, and reducing the number of homecare visits people receive. Three-quarters (76%) were reducing the number of homecare visits that people receive by careworkers, with the average visit length (calculated from 50 case studies in the survey) falling by around 10 minutes, from 48 to 38 minutes.

15. UKHCA’s evidence on the increasing use of short care episodes is supported by an analysis of visit lengths undertaken for 35 local authorities by the private company CM2000 during one week in September 2010. Comparison with similar data from September 2009 shows an increase in both 15-minute and 30-minute visits and a decrease in 60-minute ones.

16. We have heard from member organisations that some councils are employing a “Dutch auction” approach to social care, where local authority care contracts are won by the lowest price bid submitted in real time. E-auctions are a particular problem for small and medium enterprise homecare providers who may feel that their survival is based entirely on the public sector purchaser and that they are effectively forced into winning the contract at any price however low. The Scottish Parliament’s Local Government and Communities Committee investigated E-auctions in June 2009 and now no council in Scotland uses E-auctions for social care.

Personalisation of Social Care

17. UKHCA supports the delivery of more personalised health and social care services across the UK. UKHCA was a signatory to Putting People First, and more recently the new sector-wide agreement transforming adult social care in England, Think Local, Act Personal. However, it is important to recognise that there are significant risks and threats for home care providers from the way that self-directed support is being implemented by some local authorities. Until now, these have been little acknowledged, but could potentially have important unintended consequences for the sector. At its most extreme, it “could spell large-scale destruction of the sector”.

18. Organisations that have been largely dependent on local authority purchasing may, within a relatively short period of time, lose contracts across the board, leading to a rapid reduction in guaranteed volume and therefore income. Many independent homecare providers are highly dependent on local authority contracts for their business. As mentioned above, over half are reliant on councils for 80% or more of their hours. For many, this loss of income could lead to closure.

19. Our point here is not a plea for inertia, but a caution about the rapid, and often uncoordinated way that councils are changing their contracting arrangements, leaving established providers with limited scope to source alternative revenue streams. In effect, the actions of some councils are destabilising their local care markets at the expense of adequate volume supply.

20. A critical question is the impact that the changes will have on social care capacity. There is no guarantee that staff will remain in the homecare sector if their original employer ceases trading. They may move out of social care altogether, thereby reducing overall capacity. Even where providers survive, some of the planned changes may make staff retention more difficult. Public sector contracts make it possible for providers to guarantee their front-line staff at least some work.

21. With the possibility of these guarantees gone or reduced there is likely to be more instability in the social care labour market and an increase in the churn of workers between employers. There is also likely to be less overall work on offer and possibly more fluctuation, which may lead to some care workers being lost to the industry.

22. One consequence of moving to self-directed support is that formal domiciliary care providers may lose staff to direct payment users. Member organisations tell us that the direct payment rates received by service users who have previously been their clients are usually not enough to enable them to continue to purchase their agency’s service unless they can afford to “top up” their care, ironic given the principle of direct payments is to extend service user choice.

23. Member organisations’ views are supported by a 2007 UK wide survey of direct payments which found substantial variation in the rates paid to service users, with many local authorities stating that payment rates were lower than the average costs of homecare providers. The researchers found the average hourly direct payment rate to an older person in England was £8.70. This compares unfavourably with £12.89 for state-funded homecare.

24. As a consequence of the low direct payment rates paid by councils, some service users are now directly employing the care worker originally introduced to them by their homecare agency. They are able to do this because they incur none of the agency’s overheads for training, registration and regulation. Self-directed employers are not required to provide training for their staff or to carry out security checks. It seems entirely illogical to UKHCA that government should have brought about a highly regulated sector from 2002, while at the same time, promoting a cash payment system for the engagement of untrained, unqualified, unsupported and unregulated personal assistants.

25. The direct employment of personal assistants by service users in social care has many characteristics of a grey employment market. While worker and employer will agree a wage rate that is acceptable to both, there is no guarantee that either will have an understanding of the National Minimum Wage, and the majority of service users, many of whom are extremely frail, may have little or no experience of acting as an employer. This has been confirmed by a number of studies showing that personal assistants are in very vulnerable employment situations.

Barriers Faced by Recipients of Social Care when they Wish to Relocate to Another Area

26. This is not an area of UKHCA expertise and therefore we offer no comment on this question.

Economic Regulation including a Proportionate Failure Regime

27. The case of Southern Cross Healthcare case has raised the question of whether there is a need for an economic regulator to monitor the financial standing of private care providers, in particular the finances of large providers. UKHCA believes that it would be highly disproportionate for the failure of a large residential care provider to lead to the economic regulation of the homecare sector.

28. The problems of Southern Cross stemmed from unsustainable rent bills, falling bed occupancy rates and a drop in revenue from councils. What made it a particular problem were the scale and the concentration of Southern Cross care homes, which no single local authority could manage. Southern Cross was also a complex company with complicated models of finance which involved loan financing and equity financing.

29. The homecare sector is fundamentally different from the residential care sector. Care is carried out in a person’s own home and not in a care home. Therefore, homecare providers do not own or rent properties, except for their Head Office and, in the case of larger providers, any branches they have. Accordingly, homecare has an entirely different financial structure to residential care.

30. Also, unlike residential care, homecare is made up of many small homecare providers, with most having fewer than 100 people using their service. Each year, CQC approves approximately 500 new domiciliary care agencies. There is evidence that the homecare industry is becoming more consolidated, but the market still remains fragmented with a few large providers and many small ones. Laing & Buisson’s 2009 survey of the domiciliary care market found that 74% of homecare branches were stand-alone businesses and 26% were part of a business group. 10% of for-profit were part of a franchise group.

31. What the homecare sector needs is not an economic regulator to monitor its finances, but for councils to pay providers sustainable fees that reflect the true cost of service provision, including the real cost of regulatory changes, workforce development and a sustainable pay-rate that retains a skilled and qualified workforce. Economic regulation would add considerably to the costs of homecare providers.

32. We believe that, rather than monitoring the financial standing of homecare providers, the Government should require local authorities to have robust contingency plans in place to deal with a provider in financial trouble. This would ensure that continuity of care and quality of care were maintained.

33. The proposal that Monitor will become the sector regulator for adult social care causes us considerable concern:

Monitor’s experience is of large organisations (orders of magnitude).

It will be a blunt instrument, especially if it’s applied to all providers, not just those who wish to supply to the NHS as under any qualified provider.

There is a risk of providers being disqualified because, although they are “for profit”, they are willing to operate at a very low margin because they provide a justifiable return on investment, employ local people and carry out a socially important function.

Integration of Health and Social Care Services

34. UKHCA supports the closer integration of health and social care to better meet the needs of individuals and provide an enhanced patient/user experience. We believe that integrated services are necessary to meet the increasing demands of an ageing population, especially in this time of economic austerity.

35. Evidence suggests that is some degree of integration already in place in a number of localities across England, but most PCT’s and local authorities have not moved as far as structural integration. According to a national survey of PCT chief executives and directors of adult social care, the main factors that promote integrated working are local determined. These include local leadership, vision strategy and commitment. Conversely, the top factors that hindered integrate working are nationally determined. These include performance regimes, funding pressures and financial complexity.

36. The most cited example of successful integration of health and adult social care services is Torbay. Achievements there include reduced use of hospital beds, low rates of emergency admissions for those aged over 65 and minimal delayed transfers of care from hospital. Use of residential and nursing homes has fallen and at the same time there been a corresponding increase in the use of homecare services. There has also been increasing uptake of direct payments in social care and favourable ratings from the Care Quality Commission. However, it may be difficult to replicate the experience of Torbay as the area had some distinctive characteristics that will be difficult to reproduce elsewhere. In Torbay there was an urgent need to improve the council’s performance and the PCT was aware that more effective health care relied on improved social care. This meant that both the council and the PCT were receptive to change, and minimised any potential resistance to change.

October 2011

Prepared 13th February 2012