National Minimum Wage

National Minimum Wage
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There was, as in previous years, a wide geographical variation in fee increases, and at the
regional/country level this ranged from -1.8 per cent in East Anglia to 4.4 per cent in Wales.
The averages for England, Scotland and Northern Ireland were all 0.0 per cent. Laing &
Buisson estimated that in 2011/12 the increase required to keep pace with care home
inflation was 2.8 per cent.
2.135 Since our last report the issue of social care fees has been considered by several other
bodies. In July 2011, the Dilnot Commission report on possible reform of social care funding
in England was published (Commission on Funding of Care and Support, 2011). There have
also been a number of judicial reviews brought by care providers against local authorities in
their fee setting. While these have been about the process used by local authorities, rather
than determining the fee level itself, they have highlighted the types of guidance and factors
authorities should have regard to when setting fees, including the costs of care. In addition,
the Equality and Human Rights Commission (2011) conducted an inquiry into older people
and human rights in home care in England, which strongly endorsed our recommendation
on commissioning.
2.136 We have also received evidence of moves within government to assess and review the
commissioning process. The Department of Health told us it has conducted an engagement
exercise with representatives of both care providers and local government. Many of the
issues raised focused on how to build a sustainable market and to improve the
commissioning capabilities of local authorities and the NHS. In addition we heard of
discussions between provider organisations and the Association of Directors of Adult Social
Services about how councils and providers can work better together on fee negotiations,
ensuring a fair reflection of costs.
2.137 Our view is that public commissioners of services have a responsibility to fund providers
such that they are able to discharge their statutory obligations, including the NMW. We have
noted the continuing developments outlined above. We welcome and encourage moves to
address commissioning issues, and we ask the Government to address sustaining the supply
of social care, such that providers can meet cost pressures like the NMW, in its forthcoming
Care and Support White Paper.
2.138 In other sectors, the NDNA told us that a large proportion of fees paid by parents went
directly to fund staff salaries. With average fee increases in recent years below inflation,
and with a substantial proportion of nurseries struggling to break even, it claimed increases
in the minimum wage would continue to have a direct impact on nursery fees and business
margins. The National Hairdressers’ Federation (NHF) said that the uncertain financial
situation in the economy had fed through to consumer confidence and depressed spending
on the high street. Clients were often cutting back on the frequency of their visits and
reducing spending per visit, with consequent pressure on prices and margins.