Increase to minimum price for homecare – local authority commissioners to take note

The United Kingdom Homecare Association (UKHCA) has announced its new calculation for the minimum price of homecare of £20.69 per hour (to be effective 1 April 2020).

One of the main drivers for this increase is the 6.2% increase in the National Minimum Wage (effective also 1 April 2020). The new sum represents an increase of £1.76 on the previous rate of £18.93 (April 2019).

The minimum price is a legally compliant pay rate for care workers and one of the tools that local authorities should consider when commissioning adult social care services*. The price takes into consideration travel time, mileage and contact time as well as the minimum contribution towards running a care business. The minimum price also accounts for profit or surplus (at £0.60) with the remaining £20.09 allocated to direct business costs.

The UKCHA has made it clear that the costs of homecare are not to be underestimated by local authorities, as providers must be able to pay at least the national minimum wage and provide effective training and development of staff. The UKCHA considers a cost-saving approach to commissioning undermines the ability of providers to improve the quality of their services, and will also risk worsening the experience of care workers, leading to a destabilised workforce in a sector which is already facing significant recruitment challenges.

From a local government perspective, we are already seeing providers asking how local authorities will confirm the new rate in existing contracts, and we expect that providers will exercise their termination rights should the new sum (and with it, additional funding) not be provided by local authorities.

Furthermore, local authorities will also need to consider how this new rate will be budgeted and accounted for if the 2% precept (announced in the Queen’s speech) is insufficient to meet the increased cost. To avoid implementing a capped rate or commissioning at an unsustainable level, local authorities and providers could explore how private payers could contribute to the cost by topping-up their care.

It is important that local authorities and providers engage in practices that reward excellence and maximise value for money, rather than using minute-by-minute commissioning, which prioritises the quantity of service users over the quality of their care.

Whether you want to maximise the value of your current contracts or maintain a quality adult social care service, our team of advisers can provide sector specialist support to your organisation.

For more information

For providers, please contact John Wearing if you require assistance, and for local authorities requiring assistance, please contact Olwen Brown.

*Paragraph 4.31 of the Care Act Guidance 2014

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