The Sector Pulse Check 2023, jointly commissioned by learning disability charity Hft and care provider representative body Care England cherishes the coming General Election as a meagre glow of optimism amidst the sustained crisis of escalating costs and workforce shortages.
The report, based on a large-scale survey of adult social care providers, finds that despite a £7.5bn funding boost announced in the 2022 Autumn Statement, there has been little progress in addressing the key challenges facing the sector.
Energy costs have increased by an average of 73% and unfunded rises in the National Living Wage left 40% of adult social care providers in deficit in 2023. The report says recent funding initiatives from government such as the Market Sustainability and Improvement Fund and International Recruitment Fund have made no difference to the financial sustainability of care providers over past year – the money simply isn’t coming through to the coalface.
These financial challenges are compounded by a deep-rooted and systemic crisis in the workforce – despite a rise in international recruitment, staffing shortages remain widespread. Last year, nearly half (44%) of organisations had to turn down admissions due to a lack of staff. Hft and Care England have called on the government to implement immediate measures to support the care sector – including improving commissioning practice, revising VAT arrangements and removing barriers to ethical international recruitment.
The call to revise VAT arrangements is interesting; the report recommends that the government mandates that all local authorities facilitate VAT restructuring, whereby care providers are enabled to claim back VAT incurred on costs associated with providing publicly funded services. While VAT restructuring is cost neutral to local authorities and Integrated Care Boards, the ability to claim back this VAT is a financial lifeline for care providers, a significant number of whom are struggling to remain viable. While many local authorities and ICBs are now working with care providers to get VAT recovery arrangements in place, others are prevaricating, and so denying the benefits of VAT restructuring to the care providers from whom they commission services. If government was to oblige local authorities to implement VAT restructuring, this would significantly reduce operating costs for care providers across the country.
VAT restructuring is just one of several recommendations in the Sector Pulse Check 2023 report – in the words of Care England CEO Professor Martin Green: “As we count down to a General Election, the Government must now make good on their promise to fix our sector. The recommendations outlined in this report represent pragmatic first steps and I urge the Government to lose no time in implementing them.”
For more than 15 years, Kieran Lynch & Co have been supporting care providers through VAT recovery. Over that period managing director Jock Waugh and his team have returned more than £100 million in net benefits to the sector.
With years of experience in VAT recovery under the Kingscrest ruling and Contract Restructuring, Kieran Lynch’s expertise is on the restructuring of welfare services to allow care providers the opportunity to improve their trading positions by being VAT efficient.
Thinking about restructuring for VAT recovery? Contact Kieran Lynch here on our website or call us on 0114 262 2127.
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