The financial impact of COVID-19 on the Adult Social Care Sector

OSn 19 March 2020 the Government announced £1.6 billion funding for local government for meeting pressures across the range of public services and £1.3 billion to go to the NHS and social care for discharge support.

On 18 April 2020 central government topped up this pledge announcing a further £1.6 billion for local government.

And in addition to this, on 13 May 2020 the Government announced £600 million for an adult social care infection control fund.

Access to additional money

My colleagues Maddi Gaunt and Nythan Smith have reported on the bureaucratic process to access these funds as well as the sheer confusion surrounding what these additional funds can actually be spent on.

Whilst the £3.2 billion announced on 19 March and 18 April 2020 to meet pressures of the pandemic across the range of public services was not ring fenced for adult social care, according to the Chairman of the Local Government Association (LGA) only 40% of it has been allocated to the sector.

Furthermore the £600 million infection control fund has strict rules of access. The requirements on the Local Authority (LA) include:

  • The LA will receive the money in two equal parts. The first installment was paid to LAs on 22 May 2020. The second installment is due in July 2020 but will be paid only if the LA has submitted a Care Home Support Plan by 29 May 2020 and used the entire first installment for infection control measures.
  • 75% of each installment is to be paid directly to care home providers to support infection control measures prescribed in the conditions of the grant whilst the remaining 25% is for other non-prescribed infection control measures undertaken by the wider workforce including domiciliary care
  • The grant is to be fully allocated by 30 September 2020 and a statement sent by the LA to DHSC by that date certifying that both installments have been spent on the infection control measures.

The requirements on the provider are just as bureaucratic:

  • To be eligible for the first installment the provider has to have completed the Capacity Tracker at least once and committed to completing it on a consistent basis
  • To be eligible for the second installment the provider must have used the entire first installment on infection control measures (a transfer of the requirement on LAs).
  • By 23 September 2020 the provider has to provide a statement to the LA that they have spent the funding on infection control measures costs incurred after 13 May 2020 and if requested provide receipts to the LA or DHSCS.
  • Any monies not used for infection control must be repayed.

It is understandable that a grant from the infection control fund cannot be used to alleviate general financial pressures a provider is facing, but when the fund was announced it was confusing as to the reason why a grant from the infection control fund could not be used for additional PPE or deep cleaning by external contractors. According to the DHSC these costs are not to be covered by the 75% proportion of the grant, but rather:

“Local authorities may use 25% of the grant on other COVID-19 infection control measures, including payments to domiciliary care providers or wider workforce measures. These wider measures could include, for example, additional financial support for the purchase of PPE by providers or by the local authority directly (although not for costs already incurred) or measures the local authority could put in place to boost the resilience and supply of the adult social care workforce in their area in order to support effective infection control.”

Are these grants enough?

According to a joint ADASS/LGA press release, analysis commissioned by councils and social care directors has revealed that providers of adult social care services may face more than £6.6 billion in extra costs by the end of September 2020 this year due to the COVID-19 crisis. This estimate is made up of £1.018 billion in increased staffing costs, £4.179 billion in PPE costs and £700 million of extra costs around enhanced cleaning of care homes. In addition to these extra costs, the adult social care sector may face further financial pressure of lost revenue to the tune of £714 million.

Whilst the extra funding from the Government is a help, it falls short of what is needed in the months ahead, especially when there were concerns about the financial viability of some care providers before the pandemic. Now with the extra costs of PPE, staffing and with care home vacancies, according to a BBC news article a quarter of directors say they are worried about the ability of most of the companies in their area to survive. And 7% say they are worried about the sustainability of all local care providers. They are calling for the Government to provide more funding.

One could argue that this potential financial crisis in the care sector has contributed to the spread of the coronavirus, with reports that care homes felt under pressure to take people from hospital, whether or not they were COVID positive, because they needed to keep the business going.

ADASS has published the second of a two-part report which together paints a vivid picture of the terrible impact of the Covid-19 pandemic in the social care sector. It reveals the scale of the financial impact of the pandemic as well as the ability of local authorities to fund adult care. Most importantly the report is calling for a two-year ring-fenced funding settlement for adult social care as well as reform of the sector, including better pay and conditions for care workers.

James Bullion, ADASS President states: “Urgent action is needed to plug the financial black hole that has been blown in local government finances, to properly recognise and reward colleagues working in social care, stabilise providers of care and most importantly safeguard and ultimately enhance the care and support available to those of us who need it. Without such action, local authorities will run out of money, care providers will go to the wall, many of us will not get the care and support we need, and the economy will take a further hit as more of us are forced to give up work to fill the caring gaps.  Prioritising social care is the right thing to do morally, ethically, economically and politically.  We must act now, for all our sakes.” 

Let’s see if the government takes heed of this very strong message.