FSB sets out recommendations for social care as £12bn ‘health and social care levy’ takes effect

Press Releases 6 Apr 2022

FSB sets out a plan of reforms to tackle issues which are making life harder for small firms in the adult social care sector in England.

  • Small health and social care businesses impacted by national insurance increase from today as operating costs spiral and workplace absences rise   
     
  • UK’s largest business group urges creation of cross-government social care taskforce, late payment reform and incentives to assist struggling homes across England
     
  • FSB encourages firms to seek out support from newly uprated Employment Allowance and local authorities  

The Federation of Small Businesses (FSB) has set out a plan of reforms to tackle issues which are making life harder for small firms in the adult social care sector in England.  

Its recommendations come as the Government’s 1.25 percentage point increase to national insurance and dividend taxation takes effect, a move set to have a big impact on care homes which are already up against high energy costs, labour shortages and widespread workplace absences due to Covid.

The latest Office for National Statistics figures show that more than one in ten (13%) health and social care firms are not currently fully trading.   

The group is calling on the Government to set up a cross-department task force on social care, to give the sector the attention it deserves, take action to ameliorate the long-running recruitment crisis in the sector, and help social care workers with transport costs.

With an ageing population already increasing the demand for carers and support services, getting more people to consider a career in adult social care will be crucial, as will boosting retention levels.

The UK’s largest business group is also encouraging those within the care sector to check their eligibility to access the newly uprated Employment Allowance, which benefits around 60,000 health and social care businesses annually.

It is also flagging unspent Covid support grants at the local level for hard pressed small firms.   

FSB is calling for:

  • The creation of a cross-Government task force on social care, including all relevant departments and agencies, to ensure that all parts of government are working together to sort social care delivery; the task force should agree on a strategy with a timeline for completion.
     
  • The extension of the £3,000 apprenticeship incentive, after it ended on 31 January, to encourage social and domiciliary firms in England who are willing to take on an apprentice to do so, and help with costs at a time when the cost of employment is increasing.
     
  • The extension of the £1,000 incentive for T Level industry placements for employers in England beyond July 2022, to promote the development of a successful T Level system by supporting employers in social care to host more placements; employers are keen to deliver T Level placements, but are concerned about the amount of time and resources a placement would take – 85% of employers say that a financial contribution would encourage them to take on a placement.
     
  • The Government to require local authorities to adhere to the same Duty to Report regulations adhered to by larger businesses, to ensure that prompt payment terms are passed down local government supply chains; the late payment crisis is leaving a fragile sector even more exposed.
     
  • Tax relief on car use for social care workers, by keeping the approved mileage rate at 45p per mile after 10,000 miles, instead of tapering off to 25p per mile.

Melanie Ulyatt, FSB’s National Vice-Chair, who runs a care business, said: “There are many challenges facing the adult social care sector, while demands on care providers are only intensifying with another increase in employment costs from today.

“The Government can show it is serious about helping the sector thrive by setting up a task force to consider social care issues from every angle, ensuring that the direction of travel is similar across departments and agencies.

“Putting in place measures to raise the profile of social care and tackle labour shortages is a necessary step. Failure to act will exacerbate the acute crisis in social care recruitment, making it harder for vulnerable people to get the levels of care they need.

“The adult social care sector plays a vital role in caring for elderly and vulnerable people, and ensuring that the sector has a sufficient pool of staff will be ever-more important as the UK population’s age profile gradually increases. Making social care a more attractive career choice, through apprenticeship and T Level incentives, is definitely smart policy.

“We were pleased to see the Government followed our recommend to expand the Health and Care visa to include social care workers, a change which came into effect in mid-February and which will last for 12 months.  

“Many care workers rely on their cars to get them to clients’ homes and care settings, so we think allowing them to claim the higher rate of tax relief for their full mileage would be a good move to help offset their transport costs, especially as fuel prices have risen sharply over the last year, while in many areas public transport does not represent a viable alternative.

“Like all small businesses, social care providers are vulnerable to cashflow problems caused by late payment. There’s no reason why local government bodies should not be required to prove that their payment practices are swift and fair, as large businesses have to. Removing this disparity will help encourage prompt payment and ease cash pressures in small business supply chains, including among social care providers.

“The Government rightly took forward our proposal to increase the Employment Allowance at the Spring Statement and we’re urging all small businesses to make use of that vital relief. As well as speaking with us, firms which are struggling should also reach out to their local authorities – in many locations covid support grants are still yet to be allocated.”

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Matt Dickinson

Matt Dickinson

Deputy Head of Media & Communications

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About FSB

As the UK’s largest business support group, FSB is the voice of the UK’s small businesses and the self-employed. Established over 40 years ago to help its members succeed in business, FSB is a non-profit making and non-party political organisation that’s led by its members, for its members. As the UK’s leading business campaigner, FSB is focused on delivering change which supports smaller businesses to grow and succeed.

FSB offers members a wide range of vital business services, including access to finance, business banking, legal advice and support along with a powerful voice in Government. Each year FSB also runs the UK’s Celebrating Small Business Awards. More information is available at www.fsb.org.uk. You can follow us on twitter @fsb_policy and on Instagram @fsb_uk.