01 Dec 2023
by Dr Jane Townson

Younger disabled adults were among the first to promote the use of individual care workers (usually referred to as personal assistants) and direct payments. They did so because they felt disempowered and restricted by council commissioning practices.

Some wanted support with household tasks, seeing friends, or remaining in employment. This type of activity would not meet the threshold for regulation if provided by an organisation. In contrast, personal care or healthcare activities, as defined in the legislation, would meet the threshold.

Many younger disabled adults value the autonomy and flexibility of direct payments. Arranging their own care and support offers choice and control, though many find the administration burdensome.

Skills for Care estimates there were about 100,000 personal assistants filling 130,000 jobs in 2022/23[i]. There were 555,000 filled posts in Care Quality Commission (CQC) - registered domiciliary care services. Personal assistants thus represent almost 20 percent of the homecare workforce.

Care regulators in the UK, such as the CQC, do not oversee care delivered by individual care workers (personal assistants). They are exempt from registration if they provide personal care to a person who arranges their own personal care (or a related third party does so for them), and the care worker works directly for them and under their control, without an agency or business involved in managing or directing the care provided.

Councils cutting costs

Budgetary pressures mean more councils are seeking to cut costs by promoting the use of direct payments and personal assistants who deliver unregulated care.

Unregulated care delivered by individual care workers is cheaper than regulated managed services, because it avoids the high costs of meeting regulatory requirements. Operational overheads are also lower.  

Direct payment rates are typically lower than rates for commissioned homecare. Indeed, they are often below the amount needed to cover the National Minimum Wage and statutory employment on-costs. Fee rates which are too low are just as much of a problem for recipients of direct payments and those who work for them as they are for providers of commissioned services. Recruitment and retention of care workers is a challenge for everyone.

Employment status and personal assistants

Traditionally, most personal assistants were PAYE employees, with the person using the personal assistant taking on the role of the employer.

Such an arrangement required a well-funded support service, as the tasks involved in employment were not straightforward or familiar to most people who use personal assistants. The support services therefore offered advice on recruitment, insurance and payroll arrangements, contracts, job descriptions and other employer responsibilities and liabilities.

To reduce costs further, some local authorities tried to circumvent this by saying personal assistants were ‘self-employed’.

Some people who use direct payments also prefer this as a less bureaucratic and time-consuming way to engage personal assistants.

Some personal assistants too like self-employment status, believing that it provides higher earning potential. Though hourly rates may appear higher than those paid by employers, they are often in practice the same or lower because they must also cover employment on-costs, such as pension, national insurance, holiday pay and sick pay.

The problem for everyone is that employment status is not something you can choose as a preference; there are laws and regulations defining such status[ii].

Categorising a personal assistant as self-employed, when they do not meet tests for self-employment under tax law, is unlawful. It is then the individual using personal assistants and not the local authority that is vulnerable to payment of historic tax liabilities, prosecution, or employment tribunal findings.

In UK tax law, determining whether an individual is self-employed involves several tests and considerations. These are not exhaustive, but they provide a framework to understand the status:

  1. Control: This assesses control the payer has over the work of the individual. A self-employed person typically has more autonomy over how they complete their work.
  2. Substitution and Independence: A self-employed individual can usually send a substitute in their place and is not obliged to accept work. They often supply their own equipment.
  3. Financial Risk: Self-employed individuals often carry more financial risk, such as investing in their own equipment or the potential to lose money.
  4. Integration: This looks at how integrated the individual is within the engager's organisation. Being highly integrated may suggest employment rather than self-employment.
  5. Mutuality of Obligation: In employment, there is an obligation for the employer to provide work and for the employee to accept it. This is typically absent in self-employment.
  6. Contractual Terms: The actual terms of the contract can also be a significant indicator, though not conclusive on their own.

HMRC provides an online tool called ‘Check Employment Status for Tax’[iii]. This tool asks a series of questions about the specific situation to help clarify the status.

Genuinely self-employed personal assistants should be free to turn down work and have an unfettered right (i.e., without restriction) to send a substitute for any reason. They will have control over any work they undertake.

An employed personal assistant is contractually obliged and paid to provide an agreed personal service. It is the employer who controls what work is done, how and when.

Person-led care, where the individual has choice and control and receives services tailored to their needs, is a fundamental tenet of the Care Act 2014. It therefore seems likely that most personal assistants would fall into the tax category of employee.

Sometimes people who use direct payments feel they have no choice when potential personal assistants they like will only take the work on a self-employed basis. Sometimes people have denied their personal assistants the option of being PAYE employees, thus depriving them of their legal rights.

Until recently, East Sussex Council ran a scheme called Support with Confidence[iv]. This placed ‘self-employed’ personal assistants and unregulated services on an assured list.

After reading a report published in June 2023 by the National Direct Payment Forum, East Sussex Council sought legal advice[v]. As a result, they paused the scheme.

They realised they may have given older and disabled people the wrong advice and the personal assistants may not have passed HMRC tests for self-employment. This means the older and disabled people may have to become employers, register for PAYE, and deal with any historic tax underpayments. 

The Council said on its website:

“It is clear from the legal advice we have received since [receiving the report], that the personal assistant referral service and contingency planning support that we were offering won’t be able to restart.”

"People using the scheme to engage a personal assistant are advised to check the status of their PA to ensure, if they are described as ‘self-employed’, this is correct. If the personal assistant has employee status, the person needs to register as an employer with HMRC, start operating PAYE and check what action, if any, needs to be taken on historic underpayments”.

The Council is advising clients who have been using the service that they should take suitable professional advice to ensure they meet tax liabilities for their personal assistant.

They are also seeking input from residents and providers on plans to close and replace the scheme. The consultation is open until December 5, 2023, and the council will make a final decision in February 2024[vi]

Somerset Council is apparently now pushing care packages to about 2000 personal assistants, whom it claims are self-employed. The council has engaged 70 village agents, who advertise the work on WhatsApp groups. This has led to a substantial shift from the provision of regulated to unregulated care in Somerset. Other councils are aiming to follow suit, including Devon and Bristol.

Bristol Council recently issued a consultation on ways of saving money on care[vii]. Their proposals include increasing use of direct payments at £15 per hour and moving disabled people living in the community into care homes[viii].

Moving younger adults into care homes against their will, when they don’t need to be there, may not be in line with Article 8 of the Human Rights Act 1998[ix]. The BBC One Show interviewed our CEO, Jane Townson, on this issue and we advocated strongly for people’s right to choose where they live.

Micro-providers and introductory agencies

In the light of the challenges experienced by direct payment recipients in managing their own care and support, other models have emerged. Use of micro-providers offering supposedly self-employed personal assistants and introductory agencies connecting individual care workers with people needing care and support has grown. These usually operate outside regulation.

CQC provides guidance on who should register and be subject to regulation[x]. If micro-providers or introductory agencies provide ongoing direction and control of personal care or healthcare services, they need to register with CQC[xi].

Over the years, we have seen increasing promotion of unregistered personal assistants to a wider group of people. Some, especially if old and frail, may not have the knowledge or support needed to make informed choices about their responsibilities or appreciate the risks.

Councils have a duty to provide accurate information to people drawing on services and to promote arrangements for care and support which are lawful. This includes ensuring that people use the right model of employment of personal assistants for the circumstances. It also requires checking that the model meets at least one criterion for exemption from registration with the CQC.

Those paying for themselves, without contact with councils, may be reliant on introductory agencies or micro-providers for information. Some provide clear contracts and service models. Others less so.

Regulation for public protection

The purpose of regulation in adult social care is to ensure that providers meet national standards and to protect the public from the risk of harm.

Many people eligible for state-funded social care, especially if over 65 years, have advanced healthcare needs. Personal care and healthcare tasks, such as complex catheter care, PEG (percutaneous endoscopic gastrostomy) feeds, and suction, require training and supervision, preferably from a registered nurse.

There is no mandatory training requirement or supervision for personal assistants performing such tasks. Nor are there safeguards for people drawing on unregulated services.

If protecting the public from harm is a goal, regulation should depend on the activities performed, rather than on whether a care worker is a sole trader or an employee of an organisation.

The Homecare Association has repeatedly raised concerns about the vulnerability of those receiving and giving personal care and healthcare, as defined in the legislation, without regulatory oversight.

Our view is that full CQC inspection is disproportionate for personal assistants. The reality is that CQC is not inspecting even larger managed services regularly.

Instead, there could be a professional register for individual care workers who do not work in CQC registered services. Registration may require proof of training and competence in personal care or healthcare.

Change in regulations requires a change in legislation. Despite repeated correspondence with CQC and the Department of Health and Social Care on this topic, there appears to be little appetite for modifying the regulations. Typically, they wrongly conflate choice and control with ensuring quality standards. The two are not mutually exclusive.

Gas engineers, for example, cannot lawfully install or service gas boilers unless they are on the Gas Safe Register. This is a requirement for sole traders and employees of large companies alike. Consumers have many service providers to choose from, knowing that the engineers are competent.

We will continue to advocate for high standards of care and regulatory oversight of personal care and healthcare, as defined in the legislation.

If you have questions please email us at [email protected].