The UK care sector is in trouble and it’s a problem for all of us...

The UK care sector is in trouble and it’s a problem for all of us...

June 18, 2018 by Sandra


With austerity still very much a watchword in this country and the pursestrings showing no sign of loosening, many UK industries are struggling. The most high profile sector currently in trouble, of course, is retail. The high street’s issues are well documented, with big chain like Toys R’ Us, Poundland, Bargain Booze and House of Fraser the latest to find themselves on a precipice.

While few people may shed a tear for the demise of profit-focused commercial businesses like this, the struggles of some fields are far more worrying for society. The current state of the UK care industry should be of huge concern to everyone. While we might not all have a direct need for home care, we either know someone who does or may do in the not-so-distant future). Plus, of course, it’s something we may be reliant upon ourselves at some point.

They’re up against it. It’s even been said that the care industry is on the ’brink of collapse’ by some. So what are the main issues facing care companies at the moment? Let’s take a look at some of the major concerns currently keeping the sector up at night…

Growing demand

An increase in average life expectancy and various improvements in healthcare provision have led to a very sharp increase in the number of elderly people and those in need of home care. The industry is yet to catch up with this spike. Mostly because of budgetary concerns. Which stem primarily from a...

Squeeze on payments from local authorities

Council and local authority budgets are being cut all the time. Those that aren’t are still generally incapable of providing adequate financing due to rises in requirement and costs. These budget cuts hugely affect private care companies, many of which are too small to soak up occasional losses. In fact, the average British care company has a net worth of less than £350,000.

The average amount per hour that a care company can expect from a local authority is just shy of £16 per hour £7.83 of that goes to pay staff. The rest has to be split between travel time for those staff, mileage, recruitment, HR, national insurance, pension contribution, sick pay, holiday pay, uniforms, mobile phones, equipment, scheduling and supervision. And all the other associated business costs. So it’s no surprise that profits are suffering.

Carer minimum wage

With budgets so tight, care companies can ill afford to splash the cash on employee wages. Carers’ earnings are notoriously poor, but it’s not the fault of evil, hand-rubbing MDs, with their feet up on Caribbean sun loungers. The pay is low because the profits are tight. Any increase in workers’ pay has a direct effect on the profitability - and ultimately, the viability - of the company.

In Scotland, care workers have been paid the 'real living wage' of £8.45 an hour since October 2016, something which has taken a toll on the firms paying it. Any further wage increases will likely destabilise home care businesses. The rest of the UK sees closer to minimum wage being paid (an average of £7.36 an hour).

Carer sleepover wages

Many unions and care workers believe that ‘sleepover wages’ should increase. While it’s hard to argue against that from the employee’s point of view, a rise like this could be catastrophic for the industry. Especially if the proposed ‘sleepover wage repayment’ idea comes to pass. This government scheme could see care companies forced to give workers payments to atone for previous underpayments. A laudable idea in theory, but one which could see numerous care agencies and providers go out of business in practice.

Travel times between clients

Controversy surrounds the issue of whether or not homecare businesses should pay their staff when travelling between jobs. Again, from an employee’s perspective - they absolutely should. But to the companies themselves? It’s outgoings with no incomings. Deciding not to pay travel times isn’t advisable and causes unrest among workers. Paying for it though can hit the firm’s bottom line hard especially in rural areas...

Shortage of trained nurses

There is a woeful lack of qualified nurses in this country. Be it in the NHS or privately. Figures from the Office for National Statistics last year showed that of the 750,000-odd externally advertised job vacancies in Britain in the first three months of 2017, over 15% (that's around 117,000) were in the health and social work sectors alone. What does that tell you about supply and demand...?

Tougher immigration rules

The care sector relies on immigrant labour and has done for a very long time. Qualified, caring and conscientious foreign workers are the backbone of care in the UK. As yet, the gap is yet to be filled by UK workers prepared for the twin hit of long hours and low wages.

The threat to the industry is very real indeed and things need to be done to ease the pressure that the UK care sector is under. Those that receive care deserve better, those that work as carers deserve better and the people who diligently try to run care companies against the odds deserve better.

Hopefully it will recover and find the funding and reforms needed to allow it - and the people of Britain that require home care - to flourish. We’ll have to wait and see.

If you run a care business that has found itself in trouble - possibly facing insolvency -  why not contact us and see how we may be able to help you out? We’re experts in assisting ailing businesses. Give us a call today.

Filed Under: Insolvency, liquidation, administration

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