Government sleeps on sleep-in payments

The announcement on 26 July that Government will suspend HMRC enforcement activity and waive historical financial penalties, prior to 26 July, is welcome news for social care providers delivering sleep-in support, mainly for people with a learning disability or autism. However, as ever, the devil is in the detail or lack of it.

With a clear eye on the autumn to resolve issues in social care, Government looks intent on wrapping all of its challenges up in the same Green Paper. Whilst this is understandable it is also the wrong tactic – when tension is obvious, the last thing needed is testing the elasticity of a system. Like a rubber band, it may snap when under most stress.

Social care is not the only sector facing NMW pressures. Sir David Metcalf’s Introductory Report on United Kingdom Labour Market Enforcement Strategy, 1 April 2016 – 31 March 2017, shows that accommodation and food services, hairdressing and beauty and the wholesale and retail trade are a particular focus for HMRC. However, a recent focus on the health and social care sectors has resulted in a major boost in the number of cases with arrears. Unlike the other three sectors, social care, being largely reliant on the restraints of public sector funding is unable to use the market, and business basics of increasing prices to offset costs, to steer clear of enforcement.

The Government statement merely provides a stay of execution for a financially-challenged sector delivering vital support to enable people to be independent in their own homes. The punitive 6-year retrospective penalty hanging over providers from HMRC has been waived. This may be because a legal challenge would throw this out bearing in mind that it is impossible for employers to foresee future policy change and be responsible for ensuring it was implemented before coming into being.

We also welcome the suspension of HMRC enforcement activity as it allows for proper dialogue at a local level. The enforcement activity has reached a stage where one national provider has until 15 August to comply with NLW for September payroll with all the risk that a business faces when seeing large financial calls on its funds. Anecdotally, few local authorities have come to agreement with their providers in terms of finding a way of allowing providers to pay NLW within the financial envelope available; providers need to demonstrate that NLW is paid across a ‘pay period’, usually fairly straightforward, but a challenge if that pay period includes time of less activity, when in reality the employee spends a large proportion asleep, but on duty. It’s fair to say that proper funding of sleep-in provision would cause immense financial pain to local authorities as it is unplanned for and unfunded. It would be irresponsible for local authorities to shrug and say it’s a national problem; they have a responsibility under the Care Act to ensure the local care market is viable. If that means dipping into  reserves, so be it. After all what are savings for if not a rainy day? At the moment the roof is leaking and it’s pouring. The autumn Green Paper is going to look very soggy in two months’ time.

Read the Government statement

Read HMRC’s updated policy statement on enforcing NMW in social care