A report has been published by the Department for Business and Trade offering analysis of the pros and cons of an adult social care (ASC) fair pay agreement (FPA).
This impact assessment of the Employment Rights Bill, which was introduced to Parliament on 10 October 2024, is the first phase of delivering the Plan to Make Work Pay, supporting employers, workers and unions to get Britain moving forward and fulfilling a commitment to introduce legislation within 100 days.
ARC England’s response
We have some concerns about this report. Firstly, the paper assumes that ASC providers are making a profit/surplus right now that would, in many cases, be eroded by the implementation of an FPA.
Our view is that for learning disability and autism services, this is simply not true and therefore these aspects of the assumptions the paper is based on are flawed.
Secondly, whilst the implementation of an FPA would be welcomed by our members, without additional, robustly ring-fenced local authority funding for learning disability and autism services, providers will fail and high-quality support that people currently receive will be lost to them and to the market.
Response from ARC England member Sean Timbrell, CEO, Stroud Court Community Trust
The report finally acknowledges the extent of the funding issues from Local Authorities to Care Providers and the problem this creates in association with low pay and conditions in ASC. The Care Act provides a ‘legal obligation’ for Local Authorities to sustain the market which they are at risk of breaching if action is not taken.
This FPA appears to set out a route for negotiating better pay terms which could then be passed on by providers to their staff in a more secure and managed way. It is evident that the government is seeking to ensure that any increase in funding that may be generated for local authorities to pass on to providers is protected to improve pay and conditions as opposed to contribute to profit margins.
The report acknowledges the cost of the FPA, however, there is some concern over two of their statements within the report, which includes: “While an improvement in workforce pay and terms would increase costs to providers, these may be mitigated to a small extent thanks to certain benefits.” This is possibly suggesting that they are considering whether the higher costs to employers are covered by potential savings through improved recruitment and retention, which simply would not be the case to the extent of the funding gaps within the sector.
“Simply increasing Local Government funding would not solve these issues. Briefly, this increase in funding may not increase the fees which Local Authorities pay social care providers and, in turn, providers may not spend any increased fees on employment conditions.”
Again, a suggestion that whilst they acknowledge that there are significant funding issues in the sector, there appears to be a lack of trust in whether any increased rates would go towards increased pay and conditions as opposed to improving profit margins.
Both of these statements provide some uncertainty as it implies that Local Authority fees may not be increased which means no fee increases are passed on to providers and the potential savings of ‘legally’ forcing employers to pay more to their staff and improve conditions may offset the overall cost to employers.
They recognise that doing nothing is not an option as it will exacerbate the existing problems in social care which is great, and they recognise that pay and conditions need to improve which is great. However, there is no reassurance that this increase will be supported by local authorities and they are suggesting providers may be able to cover it! Deeply concerning, given the already apparent funding problems within the sector and the increase in National Insurance that would also be incurred with having a higher wage bill.
This seems quite a pivotal moment, as the negotiations here could decide the future of ASC and many providers. The only saving grace is the Care Act and reassurance that they are legally obliged to maintain the market sustainability.
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