In the past carers were paid a flat rate for the work. But after a recent ruling they are now entitled to an hourly minimum wage and compensation for six years of back pay – a cost care providers are expected to bear. The liability could leave the learning disabilities sector alone facing a cost of some £400m, while children’s homes may face a bill of between £40,000 and £2m each.
It is a bill many organisations say will bankrupt them if the Government does not step in.
“Having to pay that amount would drive medium to small providers out of business,” Derek Lewis, Mencap’s chair of trustees, told Sky News.
Under the government’s proposed solution to the problem, care providers will opt into a “compliance scheme” which will give them 15 months and HMRC support to identify and pay what they owe workers.
It is a programme the government says has “been designed to help ensure workers are paid what they are owed, while also maintaining important services for people who access social care“.
But providers have criticised the scheme, and have urged the government to commit to financial help with the bill.
In a statement responding to the scheme, Mr Lewis said it meant only the “promise of further delay”, with “no commitment, even in principle, to accept responsibility for a liability created by Government changing the rules.”
“Today’s announcement may help HMRC understand the extent of the liabilities for back pay but it completely fails to give any reassurance to people with a learning disability that their homes and care are secure and to carers that their jobs are not under threat,” he said.
An assessment of the 2,000 specialist independent children’s homes in the UK found 25% could close if forced to meet the cost of back pay.
Jonathan Stanley, the chief executive of the Independent Children’s Homes Association, said the cost would be the “final nail in the coffin” for providers who had not received funding increases from local authorities for many years.
“Without urgent Government assistance, the residential child care sector faces profound change and one of the most important care options for vulnerable children will be lost forever,” he said.