News Opinion

Sleep in shift pay ruling could have severe repercussions for service users

Andrew Lennox, CEO of Eden Futures

Andrew Lennox, CEO of Eden Futures, has worked within healthcare for the past 20 years holding a variety of positions in both the supply of products and services to healthcare environments, and in senior management of health and social care services. Prior to his appointment as CEO in 2014, Andrew was the Hospital Director for an acute private hospital where he delivered step change improvements in both engagement and performance.

Whilst Dignity & Safeguarding are key elements of safe care provision, the market is very obviously overshadowed by the issues of fees and sleep nights.

Many providers have joined the Social Care Compliance Scheme (SCCS), but to date have had little further detail from HMRC on how the scheme will operate. In theory, many providers will not reach a conclusion with HMRC until December 2019 and then have 3 months to pay in full.

Whilst many are seeing that date as the point where companies will begin to falter, in reality the issue will come to a head sooner than that. Many charities and private companies have year-end accounting dates that will require them to issue their accounts long before 31st December 2018. Auditors have already made it clear to the industry that in 2018 they will expect to see statements of any contingent liability around sleep nights historic six-year back-dating, and will not sign off accounts without such statements in.

This may result in many companies having to declare themselves in a position of being balance sheet insolvent long before they reach a conclusion with the HMRC. The time bomb in social care is ticking louder than ever.

Many will be playing for time with the Mencap Court of Appeal case due to be heard in March. The expectation at this stage is that we will not get a judgement until late May or early June, and that will in all probability throw up further issues and queries and the potential of appeals to the Supreme Court. Until that is all concluded, doubt may be cast on the nature of historic sleep nights. If that does play out, it could lead in to extensions of the SCCS deadlines.

In the event that the liability is found to be on providers going back six years, it is clear from a variety of studies that a large number of significant providers will go out of business. Whilst many point to the way the industry rallied around to resolve the collapse of Southern Cross, at this time few providers would be willing to take on services in the same way due to the six-year liability that would carry across to the new owners under TUPE arrangements.

At some point the government will have to step in and provide funding to meet the gap in what commissioners paid at the time versus what they should have paid. Regardless of the legal position around historic liability, the government has made it clear in recent guidance that they expect National Living Wage (NLW) to be paid for sleep nights going forwards. Many commissioners however are still failing to meet the governments guidelines in their commissioning practice and paying far below the true cost that providers face.

As an industry, we have been clear that the cost is not only the face rate of NLW, but must include on costs such as pension, NI, admin, and allowance for the cost of bedding, cleaning, and the beds themselves – without which you cannot have a “Sleep night”. Whilst this seems obvious to providers, commissioners are reluctant to provide more than £7.50 x the number of hours.

With local authority budgets in review for 2018/19, provision will need to be made for a real terms increase to cover not just NLW costs, but also the increase in costs providers are seeing. Fee increases also need to be applied to sleep nights to ensure providers can fully cover the costs of care whilst the SCCS comes to a conclusion or a Court of appeal decision is reached.




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