Whether or not you agree with reports at the weekend that the NHS is facing a “humanitarian crisis”, caused by delayed discharge and unprecedented demand for services, it is abundantly clear that when it comes to health and social care, the status quo is not an option.
As calls grow for the government to do more to tackle the funding gap in social care – predicted to reach £2.3bn by 2020, David Miles, chief executive of Mears Group, agrees that the social care sector’s position is precarious.
The funding gap has become so severe that Housing and Care 21, Mitie and Saga have all decided to stop providing domiciliary care services. And as one of the UK’s biggest providers of homecare for elderly and vulnerable people, Mears has certainly been feeling the pinch. In 2014, its care business made a loss of £400,000. The following year, losses had spiralled to £5.1m, with no sign of this slowing in 2017.
But Miles dismisses any suggestion that Mears could walk away from its care business altogether. “That won’t happen, categorically not,” he says. “But we have given up 20% of our homecare contracts in revenue terms, where we believe the gap between the national living wage and the rate we enjoy from our clients is not enough to continue delivering services.”
The problem is that, reeling from austerity cuts, some local authorities have been slashing the rates they pay for homecare. Across Britain, providers receive just under £15 an hour, but a number of councils have cut these fees to £12-£13 an hour, which the UK Homecare Association, which represents domiciliary care providers, says barely covers a care worker’s salary, travel time, travel costs, statutory holiday pay, sickness and pension entitlements and does not cover the cost of providing the service or regulatory costs. At the same time, payroll costs have risen following the introduction of the “national living wage” of £7.20. According to the UKHCA, the total funding gap for homecare is £513m.
Mears has already handed back its contracts with Sefton, Liverpool and Wirral councils because they were no longer viable, publicly condemning the authorities for offering new rates that were “nothing short of encouragement to providers to breach the national living wage”. It has also refused to bid for new contracts with Solihull for the same reasons. And unless local authorities change how they contract with domiciliary care providers, Mears could decide to hand back more contracts.
Miles agrees that the government needs to do much more. Part of the solution to the funding crisis is integrated health and social care budgets, he says. “Better homecare, with better-trained care staff, would actually reduce the need for hospital beds and other NHS services. It is a vicious circle at present and someone needs to own both budgets and go for it.”
“The Manchester Devo could be the right solution, however, it needs to happen now, because the situation needs a long-term fix, not more short-term, knee-jerk funding solutions.”
But he also wants more scrutiny of how existing funding is spent.
“If I were Theresa May, I would work out what the cost of care is and where the money goes,” he says. “As a taxpayer, we pay around £24 for an hour of [state-funded] care. How does £24 become £7.20 an hour for a care worker?”
“Care work is really tough, when you think what these people are expected to do,” he says. “We shouldn’t be paying them minimum wages.” Miles advocates making care a more skilled job, with pay rates to match – he suggests around £11 an hour – and argues that this would actually save money in the long run. “Let’s make sure more of the money goes to paying care workers, making sure they’re properly trained. And then maybe they wouldn’t need as much supervision and management as currently.”
Paying more would also help to address the perniciously high turnover rates of care staff, leading to better services and reducing recruitment costs.
But Miles believes councils could stretch their social care budgets much further if they had fewer, larger, long-term contracts, instead of multiple providers on 18- to 24-month deals. “If you have lots of contractors as many councils do, that’s a lot more costly to administer than managing one or two.”
While Mears has won a handful of long-term contracts – Wiltshire and Richmond being the most notable examples – it is extremely unusual. Yet in housing, single-provider, five- to 10-year contracts are common, even though the recipients of the services are often the same.
“How is it possible that the same local authority chief exec allows the housing department to come up with a long-term single-provider model, but allows social services departments to use lots of providers working on a cascade system on short-term contracts, with no qualitative scores? I don’t get it.”
Miles argues that longer-term contracts provide certainty of revenue and allow staff to be paid more, so recruitment and retention costs are lower due to less churn, and the quality of services improves. In addition to providing homecare services to 25,000 people, Mears also repairs and maintains more than 700,000 social homes in the UK, accounting for 85% of the company’s turnover. In recent years, it has also expanded beyond maintenance into housing management and building new homes.
Miles welcomes last week’s announcement of a £7bn “affordable homes fund” as a “great opportunity” as long as it happens quickly – so many housing initiatives have come and gone “with little impact”, he says. What about the garden village proposal?
“The principle is a good one, but waiting lists for affordable housing normally are at their highest in already densely populated areas, with little to no affordable land available, therefore it will be very difficult to build new homes to the quantity required.”
Miles does not really believe that housebuilding will solve the lack of affordable homes. “Personally I’m not sure building’s the right way to go. The UK’s got lots of space in certain areas to build, but that’s not necessarily where people want to live.”
He thinks councils would be better off buying back homes, pointing out that many of the 3 million people on the waiting list for social housing are in private rental accommodation. “I don’t understand how the private landlord can make that work and why a local authority can’t make it work. Is there not a way to convert people on the waiting list into more properties for the local authority?”
So far, Mears has not spoken out much about housing policy or social care. But as council budgets continue to be squeezed, that looks likely to change.
For Miles, 20 years after he joined the company, it’s all about helping to improve people’s lives. “I am very boring,” he says – “I like trying to make a difference.”
Curriculum vitae
Age 49
Lives London
Education West Hatch high school, Chigwell, Essex. Professionally qualified electrical engineer (IEE)
Career 1985-1992: senior engineer, Cairn Electrical Engineers; 1992-1996: senior manager, Mitie; 1996-present: chief executive, Mears Group
Interests The environment
‘Care work is tough. We should not be paying minimum wages’
