A vicious cycle of cost and quality deterioration
Tim Wilson Managing Director, Assist Care Group
First published in Homecare Magazine – June 2024
Success in home care hinges on three pillars: charge rates, hours, and, controversially, exploiting systemic loopholes that must shift towards quality. Budgetary constraints force councils to seek “best value,” leading to a decadelong race to decrease charge rates with unintended consequences. This approach prompts providers to sacrifice quality and adopt questionable methods to offset revenue deficits when faced with low-rate competition.
The Downward Spiral Begins
Staffing shortages pushed homecare providers into a delicate balance between offering “best we can do” services and fulfilling council expectations. As councils adjusted expectations downward, practices such as “call clipping” — rushing visits to manage travel time — became commonplace. This soon escalated to “call cramming,” – where workers make brief appearances to complete tasks – compromising the dignity and care of vulnerable people. These practices degrade care quality and destabilise the workforce, eroding the sector’s integrity. Providers invoice for the full visit, and local authorities, as the main beneficiaries of low rates, are compromised without a clear strategy for covering genuine travel time costs and setting minimum duration stays.
“A carer might bypass a £15 hourly wage for a £12 one if they can cram 2 to 3 visits in 30 minutes, boosting their effective pay to £24 to £36 an hour. This undermines ethical providers’ ability to recruit and reinforces the commissioners’ route that the cheaper providers always pick up”. To attract and retain staff amidst these challenges, providers offer incentives like boosted pay, cheap accommodation, and company cars treated as pooled vehicles, exploiting regulatory loopholes for a competitive edge. Coupled with infrequent inspections where the key principles set out by the CQC do not actively address care workers’ working conditions and well-being. These tactics allow some providers to trade quality for volume, fostering staff loyalty through paying on planned visit durations regardless of how long it actually takes rather than care excellence. It’s worth noting that when CQC seek the workers’ views, a financially benefiting workforce is highly unlikely to ‘bite the hand that feeds them’ and give reliable views on their employer. Providers operate with impunity, and councils benefit from reduced costs, perpetuating a cycle of low rates built on fraud, diminishing service standards and regulatory compliance.
Navigating Worker Classification and Direct Payments: A Sector atCrossroads
The widespread adoption of Direct Payments and increasing reliance on Introductory Agencies to meet demand has muddied the waters between employment and self-employment. Intended to enhance service user choice and control, these developments have inadvertently led to a surge in labour misclassification. This strains HMRC, safeguarding boards, and the DWP to enforce compliance and threatens the integrity of care provision. The self-employment criteria – notably, workers’ ability to substitute themselves – is often not met, leading to misclassification. This undermines formal employment frameworks, exposes vulnerable service users to risks and degrades the quality of care. Moreover, the transition of PAYE workers to purported false selfemployment, attracted by the promise of better pay and more autonomy through self-tax assessment and self-declared income, further complicates the landscape.
“Why do we have regulated PAYE businesses guaranteeing a service when staff go onto SSP when introductory agencies who simply match workers for a fee don’t have to provide a service when the service user is most vulnerable? Built on lax HMRC enforcement of its rules, an industry that directly competes with itself has emerged.” In pursuit of lower rates through Direct Payments, local authorities inadvertently contribute to this issue without fully considering the impact on the broader economy or the regulated sector’s compliance challenges. This oversight underscores the need for a holistic reevaluation of how care packages are commissioned, ensuring one solution doesn’t hinder another and the implications of encouraging offpayroll practices.
Only through a concerted effort to clarify and enforce standards can we ensure a workforce that upholds the highest standards of care, safeguarding the wellbeing of service users and restoring integrity to the sector.
“Why opt for a PAYE system that secures pensions and handles taxes when the lure of ‘modern-day cash in hand’ through false self-employment promises immediate financial gains and, in certain cases, safeguards benefits?”
Sponsored Workers: A Double-Edged Sword
Introducing Sponsored Workers to mitigate staffing shortages unintentionally exposed regulatory vulnerabilities within the homecare sector. Rather than simply addressing workforce gaps, this strategy has exacerbated market oversaturation and disproportionately benefited unscrupulous providers, undermining those dedicated to regulatory adherence. The competitive arena has become fraught with questionable tactics—such as debt bondage, charging for visas, reference ransoming, and profiteering from expenses—used to maintain lower rates to enhance competitiveness. These practices have not only become widespread but have also allowed such providers to gain significant market share.
“In a sector shaped by lenient regulation and local authorities’ focus on cost-cutting, practices like call cramming have become more common. It’s no wonder that such a lax attitude towards compliance has paved the way for covering charge rate shortfalls through debt bondage and exploitation.”
Competition’s Impact: Costs and Regulatory Challenges
The competition for visibility on job boards and a shortage of back-office personnel have escalated operational costs, resulting in higher staff turnover and reduced service quality. This fierce competition overextends management teams to support frontline services. The absence of physical training facilities among providers could indicate inadequate staff training. Moreover, a provider listed with minimal staff at Companies House is likely ill-equipped to manage a large contingent of sponsored workers. An office with limited parking cannot feasibly accommodate numerous company vehicles, suggesting potential non-compliance with HMRC. These inconsistencies highlight significant gaps in provider monitoring, underscoring the urgent need for tighter regulatory oversight.
Poor quality, undocumented and inadequately trained staff often find their way into care roles as regulated providers rely on unregulated agencies to cover the gaps they have left. The critical need for a unified workforce within ethical providers’ payrolls is evident, ensuring care quality through vetted, accountable staff.
Buy cheap, buy twice – the Illusory Savings
The quest for ‘best value’ in care services often overlooks the hidden costs of the lowest-price options. The adage ‘buy cheap, buy twice’ aptly describes the false economy that leads to Modern-Day Slavery, with victims needing to stay in the UK for lengthy investigations. This strategy initiates a cycle where councils ‘eat their own tails’—by cutting hourly rates, they inadvertently create vulnerable adults who require significant financial support, ironically inflating the very adult social care budgets best value intended to minimise.
Additionally, the danger of these individuals slipping into undocumented, falsely self-employed roles – commonly through unregulated agencies – compounds the sector’s predicaments, endangering vulnerable populations even further and further underlines the need for Local Authorities to act in a ‘whole system’, ‘whole cost’ way for all taxpayers, not just their own constituents.
The path to negligent dilution
An ongoing pattern of welcoming the ‘11th provider’ to alleviate service gaps when the first ten were already overwhelmed has only diluted the market without increasing overall capacity or choice. This means an established provider losing 1,000 hours per week translates to 10 providers growing by 100 hours per week. This further exacerbates the shortage of CQC inspections and local authority quality assurance officers, making the sector over-reliant on trust while failing to address underlying staffing and quality issues.
An abrupt shift towards rigid licensing decisions, where well-intentioned providers stumble over minor technicalities, risks further instability in the sector, pushing more workers towards false selfemployment. While stringent regulation is necessary and commendable, indiscriminately stalling decisions across the board – to correct past oversight errors – unwittingly benefits unscrupulous providers holding their forced labour. This approach fails to empower ethical, compliant providers to regain their rightful market share.
Charting a Path Forward for the Care Sector
Decisive reforms in the structure and regulatory oversight of home care are imperative. HMRC’s selfemployment position within personal care remains a critical concern, stating that numerous workers are considered employees. This issue is further complicated by CQC’s regulatory approach, which hinges on the payment model for personal care – exempting individual workers who often act in groups, from registration when paid directly.
Shifting the compliance burden onto vulnerable individuals under the pretence of offering choice and control through Direct Payments is indefensible. This strategy not only masks the real responsibilities and costs involved but also jeopardises the integrity of the care provided. The failed introduction of the care cap heralded the potential to harmonise care provision across different funding mechanisms, striving to eliminate competitive disparities within the sector. This initiative signalled a significant stride towards a cohesive care ecosystem where equitable service delivery would flourish.
Final words
In a fiercely competitive and saturated market, providers often retain lower-quality staff due to the fear of becoming mere recruitment agents for their rivals. This retention strategy can inadvertently lower overall standards, as good employees may adopt negative behaviours, perpetuating a vicious cycle of declining standards and morale. The relentless drive for lower costs and higher volumes has ensnared homecare eating its own tail, making it impossible to compete on quality. Each silo strategy, aimed at solving one problem, creates another, burdening the taxpayer with increasing shifted costs rather than alleviating their financial load. We must break free from this selfdefeating cycle, fostering a homecare system that genuinely serves the welfare of service users, staff and providers alike without compromising on the principles of care and compassion.
If you have views on this, or any other subject, email editor@homecareassociation.org.uk
