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Carers: Back Pay Liability

Volume 791: debated on Wednesday 16 May 2018


Asked by

To ask Her Majesty’s Government what plans they have made to assist financially with the historic back pay liability of providers of commissioned care for people with learning difficulties.

My Lords, the Government recognise that sleep-in liabilities are placing financial pressures on the adult social care sector and are exploring future options to minimise the impact. Any such intervention would need to be legal, proportionate, fair and necessary. To support providers now, HMRC has created the social care compliance scheme to allow participating social care providers until March 2019 to make payments to workers.

My Lords, I thank the Minister for his answer and his concern, because this is a concern that is widely felt within the social care sector. I am associated with a charity called Walsingham Support, which supports adults with learning difficulties: those with brain-acquired injury, autism and complex needs. Like many other care providers, it is finding it very difficult to comply with the current exercise, which is for back-pay liability in respect of night-working. Until fairly recently, night workers who were permitted to sleep were given a flat rate and the full wage if they were required to work during the night.

I am so sorry. I have got a question; I have three questions but I hoped that I could give a little bit of background. Will the Government clarify the funding position as a matter of urgency? Will they commit to funding the estimated £400 million of back pay directly to those recipients? Will they commit to the additional funding needed by the social care sector to pay all sleep-in shifts? Perhaps I may be permitted to give a little—

I recognise the concern expressed by the noble Baroness, which the Government share. Even though the position on the change of the status on paying sleep-in payments changed in October 2016, we understand the size of civil liabilities for some providers who, of course, are, in many cases, providing for some of the most vulnerable people in society. That is why this HMRC scheme was set up. It gives providers extra time—up to 15 months—to get their house in order, understand their liabilities and pay them. That comes to an end in March 2019, which is why we are working on looking at other interventions and talking to the European Commission about the legality and state-aid rules in relation to that. I am afraid that I cannot give her any more detail at this stage, but I can tell her that it is a priority.

My Lords, this is particularly about the retrospective nature of this award. I contacted my noble friend, who was kind enough to take up the case of the Wilf Ward Family Trust, which provides for the care needs of young people with learning disabilities and which will be affected. Is he able to contest the retrospective nature of this decision and ensure that no similar back pay will be awarded in the future? County councils are completely incapable of making up this shortfall.

I thank my noble friend for raising the issue, which we are looking into. The point here is that the change in policy has come about because of decisions made by employment tribunals and a clarification of the law, and the job of government is therefore to help providers to comply with the law. That is how the scheme has come about, and why extra support is being looked into. We are working closely with providers to try to understand the scale of the liability and how it affects organisations differently—we think that up to two-thirds are affected. We will also make sure that any intervention that might follow—I stress “might”—is proportionate, fair and legal.

My Lords, Jeremy Hunt told MPs last week that a lot of work was going on in government on this issue to,

“understand the fragility of the current market situation”.—[Official Report, Commons, 8/5/18; col. 520.]

However, we already know that the viability of nearly 70% of the disability care sector is threatened by the sleep-in pay crisis, as last week’s survey by disability charities shows. Homes will have to be sold or more local authority contracts handed back. Is this not enough evidence of the desperate state the care sector is in and why the extra funding is needed from the Government to ensure that already low-paid staff are treated fairly and receive the money they are owed?

The noble Baroness makes an important point about the attention my right honourable friend the Secretary of State is giving this. We are taking this issue seriously, and she is quite right about the number of organisations that are affected. As I said, a scheme already exists which allows providers to defer any payments, and we are investigating whether any further interventions are necessary during that period when they can defer them.

My Lords, I draw attention to my entry in the register of interests as a vice-president of Mencap. Is there not a taste of retrospective legislation or at least retrospective interpretation of legislation in this, something we always try to avoid? When one hears figures, as we have, of some £400 million of liability for organisations undertaking such excellent work, does this not justify the Government intervening to ensure that no such organisations suffer unduly as a result of these changes?

I agree with the noble Lord that there is a retrospective element to this, but it is around the clarification of the law. The Government have put a support scheme in place through HMRC to provide that support to resist, for example, enforcement notices on workers who ought to be paid in arrears. That is up and running and it has been open since September 2017. But clearly, as that continues we are also looking at whether other interventions might be necessary.

My Lords, it is quite clear that the £2 billion extra for adult social care in the 2017 spring Budget had absolutely no relevance to this £400 million deficit and liability for providers, and it would be unwise for the Government to assume that it should be used for back pay. While it is wonderful that HMRC has slightly deferred payment, until the Government are able to help providers we will continue to see provider after provider going to the wall. Allied Healthcare cites £11 million as its own back pay on this issue. When will the Government help these providers?

On the extra £2 billion of funding, I have not tried to link it with this; it is of course at the discretion of local authorities to use that to support the social care sector in the way they see fit. It is worth pointing out that Allied Healthcare is in this social care compliance scheme. My honourable friend the Minister for Care has written to it to express her disappointment at the approach it has outlined. Its liabilities have not crystallised yet, so it is not right for it to refuse that and she has written to it to demand clarification. However, clearly we understand that the clock is ticking and that there is an urgency to this.

My Lords, can the Minister explain what the legal liability is of commissioners who commissioned care services based on the previous costs?