The excellent recent Sector Pulse Check report from Hft and Care England paints a deeply-concerning picture of the precarious state of the social care sector. Whilst the public were spun a political narrative that the Government had ‘fixed social care’, this research report lays bare the reality of just how fragile our social care sector is now.
A staggering one third of adult social care providers considered shutting up shop in 2022, thanks to terrifying perfect storm of cost pressures across the sector. Almost every week, we learn of providers closing down services, handing back contracts and struggling to cope with even the most pressing of core business demands.
In the face of the enormity of these challenges facing the social care sector, when so many providers are worrying about whether they can survive even the next few months and quarters, where does that leave sustainability?
Sustainability is about taking action today to protect the long-term future of our planet, our communities and our people. With the economy at rock bottom, massive social pressures and a distinct lack of political appetite to bite the bullet on social care investment and reform, surely that means that well-meaning sustainability changes will get shuffled to the bottom of the deck by executive teams focussed on the here-and-now?
In my role as Group Sustainability Director at CareTech, I am very well aware that first and foremost we have to deliver a high-quality and economically-viable business. Noble ambitions for sustainability mean nothing if the business doesn’t deliver on its bottom line financial viability.
The good news, however, is that delivering on key sustainability issues can address short-term pressures as much as long-term challenges. But it does require a shift in perspective. Let me use just three examples of what I mean.
Energy costs
60% of social care providers cite utility bills as a key cost pressure, with some providers reporting 500% increases in energy costs over the last 12 months. Increased energy and fuel costs are not going away. The cost-benefit analysis of reducing our energy usage is clear, with the recouping of the initial investment for improved energy efficiency and more renewable energy sources such as solar PV panels becoming ever-shorter. Considering a longer-term investment scenario, therefore, provides the opportunity for both costs and carbon savings.
Switching to low-carbon vehicles
As I’ve written about previously, whilst the up-front costs of EVs are still significantly higher than combustion engine equivalents, when you look at the whole-life costs, the latest research shows that EVs are now slightly cheaper to run than their petrol equivalents. With new salary sacrifice lease schemes, companies have a great opportunity to lower their (and their employees’) carbon emissions and save money at the same time.
Now this is the big one! The Sector Pulse Check report highlighted that 92% of respondents consider workforce pay as the most significant cost pressure. The King’s Fund has reported that an estimated 30% of care workers are paid at or within nine pence of the minimum salary level. Isn’t that the obvious thing to do? Well, yes, if you are only looking at the immediate direct costs of paying salaries. But, just shift your perspective a little and it rapidly becomes clear that this short-term approach doesn’t stack up commercially in the longer-run.
Skills for Care reports an average 29% employee turnover rate in the sector (more than double that of the NHS), with 75% attributing this to low pay rates in the sector. But, to replace a salaried employee can cost, on average, between 6-9 months’ salary when you factor in recruitment costs and training expenses. To cover staff gap, the sector engages a growing army of agency staff – but agency staff cost 80% more than permanent employees. And research is also clear that longer-serving staff are more skilled, deliver greater productivity and higher quality. When you look at all of the costs, the commercial case for bearing down on salary costs looks increasingly short-sighted.
Increasingly, the case for switching to the Real Living Wage is being recognised as being the right thing to do for employees and for employers. Independent research shows that 86% of employers report that Living Wage accreditation had enhanced their reputation as an employer and 64% that it had differentiated them from others in the same industry or activity. Crucially, over half of employers report that the Living Wage has improved both recruitment and retention, with 45% saying that accreditation had also improved the quality of applicants and 29% that it had raised skills amongst Living Wage employees. One social care provider CEO recently spoke passionately about how switching to the Real Living Wage has reduced staff turnover from over 50% to below 40% in less than a year.
Truly effective leaders understand that their role is about striking a balance between short-term needs and long-term vision, ensuring that their decisions contribute to the long-term sustainable success and growth of their organisations. And, recognising, that all of us have a wider set of responsibilities for which we are accountable beyond our own organisations.
This isn’t just a moral plea, however, for altruistic values-led leadership. Tree-hugging won’t get sustainability leaders very far! We have to be as commercially astute, perhaps more so, than our colleagues if we are to bring our executive teams with us. And we have to show how a long-term perspective offers solutions for short-term challenges.
First published in Caring Times