Rising tide

As winter approaches the competition for headline space is heating up. With fuel pumps in the south of England still running dry, the supply chain straining under a shortage of HGV drivers, energy prices soaring and the NHS gearing up for its first winter of tackling both Covid-19 and flu season without the suppressant of social distancing, newspaper editors do not need to try too hard to conjure up dramatic front pages.

Amidst the chaos of this daily news cycle, the party conference season played out with some sense of normality; Zoom conferences and mask-wearing replaced with traditional images of politicians disco dancing in suits.

On the agenda of all party conferences this year, however, was an issue that has the potential to cause severe issues for social care providers – the vexed matter of minimum wage. It is widely conceded across the sector that staff are underpaid and many firms make efforts to improve pay scales and offer other benefits. The reality for most is that working in care is a minimum wage situation. With inflation increasing sharply and the country facing a cost of living crisis, it is questionable how much longer £8.91 will suffice – especially with the Labour left calling loudly for its leader to endorse a £15 minimum wage and the Prime Minister setting out ambitions for the UK to become a “high-skill, high-wage” economy.

For care operators – especially those with little exposure to the more lucrative privatepay market – an unexpected increase to the minimum wage could provide an existential threat, especially with the added burden of increased national insurance contributions from April 2022 (an adjustment which one sector chief executive recently said takes “£5 million off the bottom line” of his business alone).It’s a tricky balance for sector leaders to strike. With the recently announced extra funding for health and social care, there is at least now a recognition that something must be done about the ailing care system – even if the NHS is taking the vast majority of the cash over the next three years.

Arguing against a pay rise for the employees of the organisation you lead is a difficult stance to take, but with wages the major cost in all care businesses then this could be the situation sector CEOs find themselves in. A rising tide lifts all boats, but if the correlation between care funding and wage costs is not kept in mind then many providers will end up in choppy waters.

Vernon Baxter,

Managing director, Investor Publishing

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