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Back-pay demands could see some social care charities facing insolvency

Authored by Phil Meekin

Phil Meekin

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Approximate read time: 3 minutes

After HM Revenue and Customs (HMRC) recently demanded six years of back pay for home helps working with learning disability charities, there has been concerns raised that many of these charities are facing insolvency within weeks.

It is thought that if these charities go out of business then around 178,000 people with learning disabilities could lose their at home assistance. HMRC has demanded back-pay as a result of government guidance changes to pay rates for 24 hour care.

In 1999, the guidance said that a carer who stayed overnight to look after someone with learning disabilities would only get paid £25 or £35 for the period when they were asleep. However, after two tribunal cases in 2015, the guidance changed and organisations must now pay minimum wage for an entire shift, pushing business wage costs up to £60 for a typical eight hour sleep.

Immediately after the guidance was changed, HMRC began investigating care organisations and serving them with enforcement notices which demanded they find tens of millions in back-pay for their staff within a matter of weeks.

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Many charities, including leading learning disability charity Mencap, have repeatedly warned the government that they cannot afford to pay the huge sums that they did not expect or plan for. The charities themselves agree with the business department that their staff should get paid more but these huge back-payments are likely to push some into insolvency, seeing workers out of jobs.

Chief executive of Mencap, Jan Tregelles, said; “We all recognise that our social care colleagues do some outstanding work and are some of the lowest paid but we cannot pay them if we do not have the money and we only receive money from government sources.”

Since the changes were announced, the charities who will be affected have been trying to seek meetings with ministers to discuss their concerns but they say senior government officials have not found time as they are distracted with Brexit.

A government spokesman commented on the current situation; “As the prime minister has said, the government is considering this issue extremely carefully and we will continue to work with the industry to ensure any action taken to protect workers is fair and proportionate.”

Although the issue falls between a range of departments including business, health, communities and the Treasury, it has affected charities up and down the country. These charities are currently asking the government to halt the enforcement notices for pay which is owing until next March when there is an appeal court hearing; they are also asking councils to pay more money for any future contracts with charities that provide care in the community.

Alongside the cost, one of the main worries for the charities concerned is that a large proportion of the ones under threat provide 24 hour care and if they close their doors, the work is likely to be passed on to the NHS who are already under pressure to provide care to an increasingly ageing population.

While these care charities struggle to meet their large bill and try to come to terms with potential closure leaving large sections of disabled people without the care they desperately need, it is a timely reminder of how just one thing can push a business over the edge into insolvency.

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