The rising cost of care: what have been the recent trends and what does the future hold?

It is well publicised that social care has been in a state of crisis for some time. Our Clyde & Co Care subject matter group continue to monitor and analyse the recent and potential future trends on typically one of the largest heads of loss in catastrophic and large loss claims.

Increasing care rates

In 2019/20, there were an estimated 97,000 vacancies in adult social care in England [i] . By 2021/22, this had increased to 165,000 vacancies [ii]  – a 70% increase in just 2 years. 

The cause of this crisis is said to be due to underinvestment for many years, the Covid-19 pandemic and Brexit. The end of free movement has inevitably reduced the supply of migrant workers, who make up a significant proportion of the social care workforce. 

How have these factors impacted on the cost of care in the context of large loss personal injury claims? An analysis of care reports demonstrates that the cost of agency care has increased significantly over the past several years:

Between 2019 and 2021, the typical agency care rate increased by 3.4%. Interestingly, this percentage was also the UK’s inflation rate during that 2-year period [iii]. 

There was then a big jump of 7.8% in agency care rates between 2021 and 2022. This coincided with the start of the cost-of-living crisis when inflation, during that year, was 9.1% [iv]. 

For now, in 2023, we have only seen a modest increase of 0.5% in typical agency care rates as compared to the current inflation rate of about 8% so far for this year [v].  

The deficit in support and care workers has undoubtedly caused agency rates to increase. The short supply means that carers are now able to negotiate higher rates and/or move jobs more frequently to take advantage of increased rates. It is difficult to say what the main driver was for the rates continuing to increase sharply in 2022: it may have been a lag from the effects of Brexit, or due to the cost-of-living crisis or a combination of both. 

With agency rates appearing fairly static this year, are we now coming to the point where they should stop increasing at a rapid pace? The latest economic data [vi] shows that inflation is falling and the number of vacancies for care workers in 2022/23 had reduced slightly by 12,000 [vii] when compared to the year before. We shall continue to keep a close eye on the agency care rates being claimed over the rest of this year and beyond. 

Aids and equipment

Of course, it is not just agency care rates which have been increasing over the past several years. While the head of loss for aids and equipment does not usually form the most significant part of a large loss claim, the cost of bigger ticket items has been going up rapidly. 

For example, in 2017, the typical cost of a recliner chair which would be recommended in a care report was £750, to be replaced every 10 years. However, we are now seeing recliner chairs in the region of £1,200 to £1,500 being recommended. 

Similarly, in 2017, a care report would typically recommend a mobility scooter costing in the region of £1,250 to £1,500, to be replaced every 5 to 10 years. Nowadays, it would not be unusual to see a care report recommend a mobility scooter costing in the region of £6,000 to £9,000. 

Such recommendations will need to be scrutinised carefully to consider whether the Claimant actually needs them and to consider whether there are alternatives which are more reasonably priced.  

Case management and therapy rates

Despite the increasing costs discussed above, there are some aspects of a care claim which have stayed broadly the same over the past several years. 

Case management rates have stayed between £105 to £115 between 2019 and the current day. 

Furthermore, rates allowed in care reports for occupational therapy and chiropody treatment have remained at around £100 per hour and £30 per hour respectively since 2019. 

In the circumstances and despite inflation remaining high, we would not expect to see any significant increases for these kind of rates in the near future. 

Future trends

Care is typically one of the largest heads of loss in a catastrophic personal injury claim. We have seen care claims increase in value over the last 5 years and the main driver for this has been the rapidly increasing agency rates. 

As discussed above, agency rates have remained fairly static so far in 2023, perhaps as a result of a falling inflation rate and a slight reduction in the number of care worker vacancies. However, a group of MPs have recently called on the Prime Minister to drastically cut migration [viii]. The proposed policy will close visa schemes for care workers, which will reduce the number of visas granted by 117,000. It is unclear whether the Prime Minister intends to implement this policy but if he does, we could see a return of rapidly increasing agency rates. We shall have to see what the future holds.
 

[i] Going into COVID-19, the health and social care workforce faced concerning shortages

[ii] We can't wait for care campaign | Age UK

[iii] Calculated using the Bank of England's inflation calculator on Inflation calculator | Bank of England

[iv] Ibid

[v] Rising cost of living in the UK - House of Commons Library (parliament.uk)

[vi] Ibid

[vii] Health Foundation response to new social care workforce data

[viii] Tory MPs issue plan for Rishi Sunak to slash migration - BBC News