Charity warns care providers could face financial ruin over back pay bill

Blog Insolvency

Those businesses which provide care for Britons with learning disabilities could be tipped into bankruptcy, a pre-eminent charity has warned.

The Royal Mencap Society is gravely concerned about the impact that a £400million bill for back pay could have on great swathes of the sector.

At present, HM Revenue & Customs (HMRC) is pursuing firms for some six years of wages.

This comes after the Government did an about turn on whether those workers who provided so-called “sleep-in support” were covered by minimum wage legislation.

Previously it had been understood that individuals who were present through the night, but very rarely called upon, should instead be paid a flat “on-call” allowance.

The fact that ministers have now agreed they should in fact be paid the minimum wage has raised concerns that a large number of organisations could end up collapsing beneath the resulting financial pressures.

Enforcement action to claim the sums of money owed was stayed back in July but is set to recommence next month.

Derek Lewis, Mencap’s chairman, was convinced that the decision would have major ramifications for many providers. His organisation alone would face a £20million bill for six years’ worth of back pay – all but wiping outs its reserves.

He said: “There would be, for a substantial period of time, chaos in the sector and the people who would suffer are people with learning disabilities, their families who would be subjected to great stress and the staff who care for them, many of whom would become redundant.

“Funding back pay would require highly damaging actions to sell assets, cut programmes and cancel investment.

“Our plans to improve the lives of those with learning disabilities could be set back by a decade or more, as we struggle to repair the financial damage that would be caused by this liability.”

Celebrities include the actress Joanna Lumley, Game of Thrones star Kit Harrington and new Doctor Who Jodie Whittaker have supported the charity’s campaign for government support.

A Department of Health spokesman has referred the media to a previous statement which said the Government has “worked closely with the sector in response to concerns.”

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