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Care Costs 2022

14 January 2022

Ian Slater considers whether the forthcoming Health & Social Care Levy is likely to have any impact on the rising cost of care.

In April 2022, the Government is introducing a new Health and Social Care Levy which is designed to deliver £12 billion a year for NHS and social care funding. 

The problems with recruiting enough carers to support the social care system have been well documented.

We have recently seen the start of a 'Made with Care' advertising campaign which will run through to March 2022 but, in our attempts to distil the effect on the care costs awarded in a civil damages claim, we should not forget that there are a number of different factors at play.

On the one hand, any annual increase in the ASHE 6145 and 6146 SOCs is driven in the main by the rates of pay awarded to home and social carers. That directly affects the insurance industry when considering the annual reclassification of periodical payment orders and their attractiveness to claimants. On the other is the reality of how claimants, being a special category of self-funder, are treated in terms of the costs of care.

Home and social care providers receive the majority of their funding from local authorities, so a crisis in funding those local authorities has a knock-on effect for the providers and the amount which they, in turn, can pay their workers.

When, therefore, we see a headline suggesting that £12 billion a year is to be devoted to NHS and social care funding, we may draw the understandable conclusion that social care wages are going to increase dramatically. 

Sadly for the care workers, however, that may not necessarily be the case with 'only' £1.7 billion a year (out of the £12 billion tax levy) being directed towards social care, and a significant proportion of that amount being taken up by training and the need to cover the cost of the new £86,000 cap on lifetime care bills. To give you some idea of the scale of the problem, calculations undertaken by the Health Foundation think tank suggest that funding for social care needs to increase to £7.6 billion in 2022/23, rising to £9 billion by 2024/25.

In other words, very little is going to go into an actual increase of carer wages to support the current recruitment drive and the loss of carers as a result of a variety of factors, including better pay in other industries, the requirement to vaccinate, and Brexit. Unison have stated that if the Government is serious about recruitment into social care, its first move should be to ensure carers get a decent pay rise. That seems to be wishful thinking.

In the short term at least, we are unlikely to see significant increases in the rates of pay being awarded to carers working in social care, particularly when the situation is likely to further worsen for employers who have been accustomed to cross-subsidising their underfunded local authority residents by charging self-funders up to 40% extra. The Government now says that practice is unfair, so self-funders will be allowed to ask their council to fix their care at the lower rate.

All of this is a long-winded (apologies!) way of saying that, whilst in the short term we may well continue to see low percentage increases driven by the annual ASHE data, these seem unlikely to reflect the real world two-tier system under which underfunded local authority payments may become even more disconnected with the rates which are being awarded by the courts, who will be naturally concerned to ensure that claimants are not put at risk in terms of their need to recruit and fund their care package. 

As providers rush to calculate ways in which to backfill margin losses, it seems logical that claimants with civil damages awards are not going to be afforded the same level playing field which is being talked about in respect of care home fees. Instead, 2022 will be a year when we see accelerated increases in the rates being suggested by case managers (when setting up packages) and experts (when advising the courts): the line "if we are to recruit and retain, then we will need to pay £x plus…" is going to become a consistent feature of INAs, reports and judgments…

To try to end with a small crumb of positivity (it is only January!), the disconnect between low ASHE percentage increases as compared with the real world rates being charged to civil claimants may actually serve to drive a preference towards lump sum settlements, particularly when we all know that claimants are getting better rates of return than GAD have previously been allowed to consider.

If you require any further information, please get in touch with Ian Slater.

Further Reading