Support for the care sector in the COVID-19 crisis

Cash flow

As a result of the £1.6bn funding that the Government has made available to councils to help with additional costs arising as a result of COVID-19, we are starting to see many instances of local authorities showing willingness to work with care providers to help manage their cash flow. In some circumstances local authorities are varying their framework agreements with providers for a temporary period to formalise this. Examples include fast-tracking payment of outstanding fees, payments on account for additional expenditure such as iPads, additional staffing costs required for covering staff sickness, recruitment and retention and PPE equipment as well as payment of fees in advance rather than arrears. We have also seen local authorities agree to pay fees at the provider’s "usual rate" where a new contract is being entered into rather than impose the local authorities rates.

We are also expecting and starting to see some local authorities uplift their fees for the next financial year by a significant percentage compared to previous years.

In addition, some care providers may be eligible for the Coronavirus Business Interruption Loan Scheme (CBILS) which supports small and medium-sized businesses, with an annual turnover of up to £45 million, to access loans, overdrafts, invoice finance and asset finance of up to £5 million for up to 6 years. The Government will make a Business Interruption Payment to cover the first 12 months of interest payments and any lender-levied fees. This means smaller businesses will benefit from no upfront costs and lower initial repayments.

Staffing

Care services are busier than ever due to the coronavirus pandemic and staffing is a challenge due to the number of workers required to self-isolate in accordance with Public Health England guidance. Some staff have also been advised to 'shield' for 12 weeks (i.e. remain at home) to avoid the increased risks to them due to underlying health conditions, however, generally quite a small number of staff are affected by this.

The Government has made significant attempts to support employers at this difficult time, including reimbursing employers for the cost of 14 days' Statutory Sick Pay per worker and introducing the Coronavirus Job Retention Scheme.

The Scheme enables employers to designate employees as "furloughed workers" (i.e. remain at home without work) and claim grants to cover 80% of wage costs up to a maximum of £2,500 per employee per month. This has been particularly useful where day services have temporarily closed, or domiciliary care visits and care home occupancy rates have decreased, due to COVID-19. It could also be used where staff are required to shield or are unable to work due to risks posed by underlying health conditions, thereby shifting the cost of these absences from care providers to the Government.

Unfortunately, the guidance about the Scheme has not been particularly clear to date and there has been doubt over whether care providers in receipt of public funds for staffing costs (e.g. those reliant on local authority or CCG funding) are eligible to claim. However, we are hopeful that there will be further clarity on this very shortly.

Helpfully, the Government has confirmed that staff who have been furloughed from jobs in other sectors (such as retail, hospitality, leisure and transport) can work or volunteer in social care without it having an adverse impact on their entitlement to 80% of their pay from their primary employer under the Scheme. This provides a huge opportunity for social care to recruit new staff to the sector and hopefully many will stay longer term.

It has also been positive to see unprecedented numbers of people volunteering in the care sector. Large scale volunteering has not been prevalent in the sector before now, but that is changing. The National Care Force, a new platform connecting local volunteers to care providers facing severe understaffing, has already seen over 20,000 people sign up to help with various job roles required in the sector, including cooking, driving and clinical care.

The Government has also introduced a new emergency volunteering scheme under the Coronavirus Act 2020. It gives workers the right to take leave from work so that they can volunteer temporarily in the NHS or social care sector.

It is hoped that these new recruitment opportunities provide relief in the short term and help grow a larger pool of penitential workers and volunteers in the medium to long term.

Regulation

Through the implementation of the Coronavirus Act 2020, there has been a general loosening of regulatory requirements and bureaucracy, which is designed to help permit central and local government deal with the pandemic more effectively. For example, modifications to local authorities' duties under the Care Act 2014 are permitted at the peak of the crisis, freeing up resource to focus on the crisis. Along with these formal steps, we have also seen some new flexibility not mandated by the Coronavirus Act, such as a new willingness by CQC to take a step back from the very harsh compliance action that they had been imposing over the last year. They have temporarily ceased routine inspections and have shown more flexibility in some contentious discussions over inspection ratings and notices of proposal to impose conditions on or cancel registrations. They have implied that they want to support the sector and have taken these steps, which have helped providers focus on what’s important in the current circumstances.

Diversification

The pandemic has also brought opportunities for operators to diversify and further secure their cashflow. With an increasing demand for rehabilitation units, whether for patients recuperating from non-COVID illnesses or for recovering COVID patients themselves, some care providers are entering into new contracts for the management and/or operation of these facilities. CQC have a fast-track registration procedure which applies in these circumstances.

The future

While there is no doubt that this is an incredibly tumultuous period for those operating care businesses, the immediate crisis will eventually dissipate. Care will remain a growing sector of significant interest for long term investors. Increased public awareness of the under-funding of the sector will hopefully result in the government finally implementing a sustainable financial model for care in partnership with the NHS.

The incredible response of care providers and their staff to the crisis will also have a long lasting impact on the importance and value of the sector to society as a whole.