Information for commissioning organisations setting Home Care Rates
When setting Home Care rates for 2020-2021, a number of commissioners (if they offer an increase at all) will attempt to offer either a rate equivalent to the increase in the National Living Wage (NLW), or an increase in line with the Consumer Price Index (CPI).
Neither of these options comes close to covering the increased costs providers will experience from April 2020:
- An award equal to the 51p increase in the National Living Wage (NLW) fails to recognise the additional wage-related on-costs providers incur, including careworkers’ travel time, employers’ contributions to National Insurance and pensions, holiday pay, training time and sickness.
- It also does not cover inflationary pressures on non-wage costs.
- Using industry accepted calculations, a 51p increase in NLW adds at least 79p per hour to employers’ wage bill in 2020, and a further 15p per hour to maintain the pay differentials for managers and supervisors.
- An award based solely on an inflationary index, such as CPI, does not reflect wage inflation experienced by employers. For example, CPI is a measure of how the prices of goods and services bought by households rise or fall. CPI was 1.5% in November and 1.3% in December 2019, while the NLW will increase by 6.2% in April 2020.
Many councils and NHS commissioners are already paying well-below the true costs of home care, so rate increases required this year will need to be higher to avoid causing further damage to the state-funded home care sector.
The following chart summaries the additional cost pressures arising from a 51p increase in the National Living Wage (NLW) from April 2020.
This indicates that commissioners should increase the Home Care Rate for 2020 by 94p.
