Considering the Government’s decision to vote against the Liberal Democrats’ amendment to exempt care providers from the April National Insurance Contribution increase, we find ourselves at a critical juncture for the care sector.
This decision, while perhaps fiscally convenient for the Treasury, reveals a concerning disconnect between policy and the realities of care provision in Britain today.
This article was written by Vicky-Marie Welfare, Director of Partnerships at We Are Care.
Pressure! Pushing down on care
The care sector doesn’t operate in isolation, it’s an essential pillar supporting the NHS and providing dignity to millions of vulnerable individuals. With the UK economy already under strain, care providers face diminishing resources precisely when demand for their services continues to grow. The NIC increase will only exacerbate this.
But there’s an uncomfortable truth we must confront: not all financial constraints in care are externally imposed.
The hidden inefficiency
There is a significant source of financial inefficiency within the care system itself, the substantial markup applied by many care agencies. These agencies routinely add 20-40% to carer rates, creating a dual problem:
- Care becomes unnecessarily expensive for end-users, providers and commissioning bodies
- Carers themselves are often paid at unsustainable rates, even if that is at National Minimum Wage – and it isn’t always!
This business model might have been defensible – I use ‘might’ very loosely – in more prosperous times, but in today’s economic climate, it represents an outdated approach that prioritises agency profits over the sustainability of the entire care ecosystem.
A new model for challenging times
The current economic reality demands a more flexible, equitable approach. Rigidly maintaining high markups when there is demonstrably less money in the system reflects a failure of imagination and responsibility.
We believe the solution lies in a more balanced economic model:
- Reasonable margins that allow for sustainability without excessive profit-taking
- Fair wages for care professionals that reflect the essential nature of their work
- Competitive rates for care providers that ensure accessibility of quality care
By compressing the artificial inflation between carer pay and end-user costs, we can create breathing room in a system that desperately needs it.
The real living wage commitment
It’s no secret that UK carers are struggling financially. Since the pandemic and the cost-of-living, the number of carers choosing to leave their roles for better paying jobs has skyrocketed and the latest statistics show 1.2 million unpaid carers are living in poverty. However, those of us at We Are Care are trying to change this. We’ve implemented a strategy that ensures carers are paid the Real Living Wage and are offering lower rates to care providers.
Since the introduction, we’ve witnessed a vast amount of positive changes. When carers receive fair compensation and reward:
- Retention improves, reducing costly turnover
- Quality of care increases, leading to better outcomes
- The profession attracts more dedicated individuals
A Call for sector-wide reflection
While we cannot control government policy decisions, we can control our own business practices. The care sector must collectively examine whether traditional agency markup models remain appropriate in these challenging times.
The government’s decision on NIC exemptions is disappointing, but it also presents an opportunity for the sector to innovate and adapt. Rather than simply passing increased costs down the line, we must find new ways of working that distribute financial pressures more equitably.
The path forward requires care agencies to embrace flexibility in their business models, recognising that when there is less to go around, everyone must adjust, not just carers and care recipients.
Those who adapt will not only survive but help preserve the integrity of a care system that millions depend upon. Those who cling rigidly to outdated margin expectations may find themselves increasingly out of step with both economic realities and ethical expectations.
Image supplied by Openverse
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