Better pay for care workers: up-front costs but long-term gains

There is growing realisation that the race to the bottom in working conditions is becoming a barrier to quality in social care. Low pay, at times below the minimum wage, and unenviable terms are unlikely to deliver the sustainable long-term care system that our ageing society requires. While many accept this, so far we have lacked a realistic idea of the investment needed to give care workers a better deal, and the wider benefits such investment would bring.

The inadequacy of conditions on the care frontline is widely recognised. Flagged by the Low Pay Commission as a sector of concern, the pay of a typical direct care worker hovers not far above the national minimum wage. An estimated one in 10 are effectively paid below this statutory minimum due to the widespread practice of only paying contact time which doesn’t always adequately cover time spent travelling between clients. Alongside low and sometimes illegal pay levels, one-third of social care workers are employed on zero-hours contracts. And training is infrequent and basic, lacking a focus on common job requirements such as caring for those with dementia.

The storm around these issues is intensifying. Increasing demand for services may create close to 1 million additional jobs in the next decade. Despite the fact that many care workers find their job hugely rewarding, low pay and poor terms will make filling these roles challenging. And with increasing public concern about standards in care, the link between the status of workers and the quality of the work they do has been brought into sharp focus. Many recognise that pay must improve not just for reasons of social justice but to ensure the viability of a service that we or our loved ones will probably require at some point.

While such arguments bring broad agreement, up to now there has been relatively little debate on what it would actually take to put the workforce on a surer footing. New research by the Resolution Foundation (where I am an analyst) to be published in coming months, seeks to fill this void by calculating the costs of a better settlement.

Initial findings suggest that paying the living wage, for example, would have directly increased the cost of publicly-funded care across the UK by well above £1bn in 2013-14. This covers all working hours and not just contact time, and includes associated expenditure on things such as national insurance contributions and holiday pay. As the care workforce grows in coming years these costs will increase proportionately. And other improvements we may think necessary, such as better training or more generous employee benefits, would increase costs still further.

Advances in commissioner and provider practices could free up some existing funding to foot this bill. Some local authorities have moved towards longer contracts, which give providers more security and time to invest in their workforce. But in truth we are probably approaching saturation point in terms of what we can squeeze from the current approach of demanding more for less. Short of overhauling eligibility for state support, the bottom line is that public funding will need to rise.

In times of austerity this will be a hard sell to any politician. Therefore, crucially, we must also demonstrate the range of benefits such investment would bring in order to make the case. Initial analysis suggests that about one-fifth of gross costs would be directly returned to the public purse via income tax and national insurance payments. As wages rise there would be further savings in tax credits and other in-work benefits.

Higher pay and better terms may improve staff retention and therefore save providers money on recruitment that they could instead invest in services. And any long-term improvements in the quality and continuity of care could spell wider savings across the health and social care budget by keeping people in their homes and out of hospital beds or residential care settings for longer.

From Cavendish, to Kingsmill, to Burstow, a series of high-profile reviews have put beyond doubt the threat that undervaluing frontline workers is posing to our social care system. Now is the time to get serious about what we need to do to prevent this threat from escalating. This involves a realistic debate about a higher funding settlement that focuses not just on up-front costs but recognises the long-term gains of better pay in social care.

This blog was first published on the Guardian Social Care Network