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Forum of Private Business

Red tape adds over a billion pounds to the care home sector

15 July 2015 14:30


Compliance now costs the care industry £21,250 per firm with independent care homes having to stump up £26,000, but the true cost is much higher

• SMEs in the care industry spend £21,250 compared to £14,200 for a typical SME
• Internal compliance costs have risen to £340 million
• Consultants account for £181 million or 35% of the entire cost
• Red tape adds up to £520 million in terms of salaried staff costs but this equates to over a billion pounds in lost care costs/
• The big difference between the care industry and other sectors is the cost of industry specific compliance (including the CQC) which accounts for £5,800 per firm.
• Members spend 15% less time on employment law, the same amount of time on health and safety and 50% less consultant costs than other firms
• Costs are likely to increase due to punitive measures being targeted at care home managers
• The Forum believes that the increase in the National Living Wage will mean that radical deregulation is required with a much greater focus on care.

The cost of compliance in the care industry has risen to £521 million with £181 being spent on external consultants. Costs per firm are £4,760 for health and safety, £5,500 for employment law, £5,230 for employment law and £5,800 for industry specific legislation and environmental compliance.

Businesses in residential care spend over £8,200 on external consultants to ensure compliance out of a total spend of just under £26,000 per firm. Organisations who undertake social work without accommodation spend around £21,600 on compliance with just over £7,000 on consultants and other social activities spend £6,750 on consultants out of a total of £17,700.

These figures are expected to increase significantly as a result of the increase in the budget and the general increases in employment – care homes saw a much greater increase in general payroll costs than other sectors.

“While everyone wants a high quality care system in this country to take care of an aging population, the Kennedy report has shown that there is tension between compliance needs and care needs” said the Forum’s Managing Director, Ian Cass.

“We have become really worried that punishments for care home managers in particular will lead to a new slew of paperwork that cannot help with the care of their charges. Caring for the most vulnerable in the community should be one of the most rewarding jobs that a person could have but the industry is beset by low pay/margins and increasingly bureaucratic workload”.

As a result the Forum has created a new Management Liability Policy to allow these organisations to focus on offering high quality care to their employees and giving them back the ability to react quickly to any emergency – vital for most care organisations.

We have also increased cover for our members in this industry removing the pernicious 51% prospect of success clause on our standard cover and including support for companies that have to act before they have time to take insured advice.

Overall Forum members pay around half as much for employment law and health and safety specialists as other firms, but spend a similar amount of time on health and safety compliance and 15% less on employment law.

This can make a big difference in an industry where the cost of care is rising, but these costs cannot be passed on to the customer as councils and private individuals have access to limited means to fund their care needs.

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Thomas Parry
Research Manager
Tel: 07885 888085

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