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HomeNewsMark Ellse: Osborne’s living wage will bankrupt care homes

Mark Ellse: Osborne’s living wage will bankrupt care homes


No longer a prediction, the facts are out. There is now open acknowledgement that the care market for older and disabled people in England is at risk. At a time when the need for care homes is increasing, nearly one in ten beds has recently disappeared. The whole sorry story is an object lesson about bad government.

As a country, the UK is skint. As Labour’s Liam Byrne put it, ‘there’s no money left’. That was in 2010 at the end of Labour’s reign when we were £1000 billion in debt. By 2020, debt will have doubled because we are still overspending and the debt is getting worse. Government has no choice but to reduce grants to local authorities. Even the Labour Party was at one time going to ‘cut the deficit’. As part of their cost cutting, local authorities in turn keep constant the fees they pay to the providers of care to the elderly instead of raising them. That puts financial pressure on care homes.

To show it cares more than Labour, the Conservative government has implemented what it has called the National Living Wage. There are reasons for this policy. On the surface it seems kind to those in work who are low paid, but the main beneficiary is the tax man, who takes 75p in each £1 in tax and reduced benefits. Employees may not notice the 2 per cent increase in take-home pay but employers certainly are affected by their 8 per cent increases in costs. And which businesses does the National Living Wage affect most? Why those with large numbers of low-paid employees, of course. Like the care sector.

No doubt the owners of care homes are all bloated capitalists. Perhaps, faced with lower income and greater expenditure, they are getting advice from their accountants on how to minimise their tax bills. In that case Theresa May is ‘coming for them’ as she promised at the Conservative Party conference and they can expect the harassment of successive HMRC investigations. But care home owners do not need further oversight to sink the ship. They already have the Care Quality Commission (CQC).

There are the best of reasons for regulating care homes. But, like Ofsted’s regime for schools, the CQC seeks unattainable perfection, which providers can only attempt to attain by a nightmare of paper-based bureaucracy. The 96 pages of the regulating handbooks, giving thousands of separately identifiable criteria for success, are just the start. Then there are the risk assessments which, if done properly, run to thousands of pages. Perhaps an odd care home might be fairly criticised because ‘risk assessments had not been reviewed’. But the CQC fundamental standards say that no-one must be ‘put at risk of harm that could be avoided’ and it is manifestly clear that the biggest risk those in homes face is caused by care providers spending more time dealing with paperwork than looking after those in their care.

So there we are. With all the best intentions, our government restricts the income for care homes, forces increased expenditure and saddles them with a regulation regime which gives despair to their managers. Faced with the impossibility of running a viable business, they (or the bank) choose to close down and sell their property. Google ‘care home conversion to flats’. You will find thousands.

Should one say that ‘British businesses are fat and lazy‘? Or is it simply the case that well-meaning but aimless and directionless government, by promising everything to everyone, has made a whole sector of the economy unviable?

Now what is next on the list? Manufacturing – over-regulated with increasing costs forced on them? No, that’s nearly gone already. What about day and teaching nurseries? Yes, they will be the next to go.

(Image: Gareth Milner)

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Mark Ellse
Mark Ellse
Mark Ellse is a physicist and author. He is a former headmaster, independent school inspector and A level chief examiner.

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