Before wringing our hands over the duplicity of the Labour Government in reneging on the previous incumbent’s commitment to implement the planned cap on how much people would have to spend on care fees, we should acknowledge that, had the Conservatives won the general election, they may well have similarly backtracked on their commitment.
The now abandoned cap on care fees was never really a starter; it would have benefited relatively few people and have been a nightmare to administer, with local authorities having to perform labyrinthine calculations for each service user, working out how much of what they had paid should be considered ‘care costs’ as against ‘hotel costs’. From the provider’s perspective, full implementation of the cap would have seen local authorities being obliged to arrange care home placements for self-funding individuals, effectively becoming ‘care brokers’ and this may well have seen a downward pressure on private fees. There was also the requirement for local authorities to pay the ‘fair cost of care’ so it’s easy to see why alarm bells began ringing in the Treasury.
The government (both past and present) perspective is that the social care system is not in fact broken, and that while some will grumble about much hoped-for inheritances being gobbled-up by care fees, the system is working for most people. However, with the level of unmet need continuing to rise as providers focus ever more firmly on the private-pay market, the question remains as to how much longer the social care system will continue to work. Government pragmatism also ignores the extent to which the NHS relies on a robust social care system.
Of more concern is the new government’s decision to scrap its planned investment in training and professional development of the social care workforce. This not only reinforces the ‘Cinderella’ status of social care as compared to careers in healthcare, but it will only make worse the already parlous state of recruitment (there are currently more than 150,000 vacancies across the UK). This can only redound to the disadvantage of those who provide social care services to people who rely on State funding, as privately funded services pay more to attract a dwindling workforce.
All this clearly means there is to be no respite for those businesses who are struggling to remain viable while providing social care services to publicly funded people. Most will already be operating at close to optimum efficiency but one option which some providers are yet to take up is to become more tax efficient by restructuring contracts with local authorities and Integrated Care Boards to enable recovery of VAT paid by providers on operating costs associated with providing publicly funded care services. Restructuring for VAT recovery can be complex, and some local authorities have yet to begin working with care providers on this, but with social care reform being as far away as ever, contract restructuring for VAT recovery is more imperative than option.
For more than 15 years, Kieran Lynch & Co have been supporting care providers through VAT recovery. Over that period managing director Jock Waugh and his team have returned more than £100 million in net benefits to the sector.
With years of experience in VAT recovery under the Kingscrest ruling and Contract Restructuring, Kieran Lynch’s expertise is on the restructuring of welfare services to allow care providers the opportunity to improve their trading positions by being VAT efficient.
Thinking about restructuring for VAT recovery? Phone Jock Waugh on +44 (0) 114 262 2127 or contact us here.
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