The Government's bungling of a historic pay issue is threatening to destabilise the care sector and could also see hardworking, undervalued care staff lose out.
Care staff often work 'sleep-in shifts' to support people with complex care needs overnight. Previously these shifts were paid at a flat rate, sometimes as little as £30. However, a tribunal judgement in 2013 established that care staff would need to be paid National Minimum Wage for all of the time they were on the premises.
In response, the Government published several pieces of ambiguous guidance to care providers, prompting HM Revenue and Customs to pursue care companies and charities for six years' worth of back pay. A survey by several major charities estimates the total bill at over £400m.
This back-pay liability could have dire consequences for a key part of the social care sector, which has suffered from chronic under funding since 2010. Swingeing Conservative cuts to council budgets mean that £6.3 billion will have been cut from adult social care budgets by March 2018. As a result, councils have had to deal with care providers closing or withdrawing care.
While there are some providers which can find the extra money without having to reduce services, there are many more who can't. This could cause mass closures which could see thousands of vulnerable people lose services on which they depend, and hard-pressed councils scramble to replace them.
There are also some 100,000 vulnerable people who employ individual care staff through personal social care budgets who may have to pay, and who could be threatened with bankruptcy. There is a clear moral case for the Government to step in with funding support, yet its latest solution hasn't reduced anxiety for people who need care, care staff or providers.
Having paused HMRC enforcement action from July until this month, Government Ministers have now proposed a 'self-review' scheme for providers, giving them 12 months to work out their liability and a further three months to pay their workers, with a final cut-off date for payment of March 2019. The scheme leaves so many unanswered questions that one firm of solicitors, Anthony Collins, is advising care providers not to join it.
Meanwhile, many care staff may have to wait a further 15 months to be paid the money they are owed.
The self-review scheme gives no support to providers, no reassurance to vulnerable people in need of care services and no certainty for under-valued care staff promised pay they've worked for. The only thing it has done is to unite all of these groups against it.
Conservative MPs, including the Chair of the Health Select Committee, have spoken out against the uncertainty the scheme creates and have called for immediate action in the budget.
The Government claim that EU state aid rules might prevent them from intervening but charities' legal advice suggests otherwise. Conveniently, the final date for payment is March 2019, the date the UK leaves the EU, so this appears to be just a stalling tactic.
It is characteristic of this rudderless Government to shirk this decision just as it is shirking a decision on the long term funding of social care. Hardworking care staff will now be made to pay for the chronic under-funding of social care, the very people 'working round the clock' Theresa May said her government would work for.
Labour believes it is time for this Tory Government to show some leadership and commit to immediate funding in the Budget to ease this growing crisis in care.