The dedicated social care team at law firm Royds Withy King outlines five key challenges facing the sector in 2020.
1: Deprivation of liberty
This year will see the adoption of the new controversial Deprivation of Liberty Safeguards regime. It is likely to be challenging, potentially creating headaches for care providers.
“There will be a whole new regime to get to grips with, as well as the possibility that local authorities will try to impose new responsibilities and contractual requirements on providers,” says partner, Mei-Ling Huang.
“Providers should try to start to understand the new regime now before any contractual requirements are foisted upon them. There may be cost implications and providers need to avoid sleep-walking into additional contractual terms without having considered the ramifications for
2: A workforce crisis
The workforce crisis will continue to be one of the biggest challenges for care providers in 2020.
“Care providers are facing significant staff shortages with over 100,000 vacancies unfilled,” says partner and head of social care, James Sage (pictured).
“Add to that, poor retention rates of around 30%, compared with just 15% outside the sector, and care providers will struggle to grow existing and develop new services. Some providers may also see the workforce shortages having an adverse impact on CQC compliance and ratings.
“The new Conservative government’s proposed immigration reforms will exacerbate this crisis, with the loss of a European workforce, the inability to recruit overseas, and care providers and the NHS competing for staff. In the absence of any workable plan to recruit more UK staff, it is essential that government relaxes planned visa requirements for the care sector.”
3 & 4: National Living Wage and the Good Work Plan
In April, the National Living Wage will increase by 6.2% to £8.72 per hour. Whilst care staff are undoubtedly deserving of a significant pay rise, it has to be accompanied by sufficient increases in local authority fee rates. Care providers should be gearing up for fee negotiations before fee rates are set to take account of their increased staffing costs.
James adds: “From 6 April care providers will also be required to meet new laws arising from the Good Work Plan. This will include a requirement to give all workers, not just employees, an employment contract on their first day of employment and extending the reference period for calculating holiday pay from 12 to 52 weeks.”
The government has pledged a National Living Wage of £10.50 for those aged over 21. “This equates to a 27% increase over the five-year term of government,” James added. “Care providers will be unable to meet these rising costs without a proper funding solution for social care.”
5: Corporate activity
Post-election and with a promise of political stability, we expect to see more of the activity that has shaped 2019: a continued focus on development and new build projects; investment from REITs and private equity houses; growth of regional providers looking to secure the next project; and exits of those operators who are disenchanted with the sector and have been waiting for the right moment to sell.
Hazel Phillips, a corporate partner in the social care team, concludes: “Unsurprisingly, 2019 has shown there is significant competition between new entrants, existing operators and investors for well-managed homes with potential to improve profit. We expect to see more of the same as retiring operators come to the market. Asking prices and quick completions will be achieved by sellers coming to the market who can demonstrate they are compliant and fully prepared with complete due diligence information at their fingertips.”