PPO ASHE care payment recalculations – the impact of the new SOC and the latest increase in care workers’ earnings

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PPO ASHE care payment recalculations – the impact of the new SOC and the latest increase in care workers’ earnings

Published 4 November 2022

The Office for National Statistics (ONS) published the latest version of the Annual Survey of Hours and Earnings (ASHE) on 26 October 2022.  The data in the survey is used to recalculate most payments that are due to be made under Periodical Payments Orders (PPOs) and, in particular, payments for future care which are linked to the earnings data for care workers.

The impact of the new SOC

The data that has been published is based on the new Standard Occupational Classification, SOC 2020, which was introduced last year and replaces SOC 2010 following the latest 10 yearly review of the SOC structure.  The introduction of the new SOC has resulted in two changes to the occupational groups that provide earnings data for care workers.

The first change does not affect the data as it is simply a name change, but does need to be noted for future reference purposes.  Under SOC 2010, there were two occupational groups for care workers including 6145 ("care workers and home carers") and 6146 ("senior care workers").  These two groups were derived from a single group in the previous SOC, SOC 2000, namely 6115 ("care assistants and home carers") and, as their data was published in a combined table, continued to be known together as 6115.  They have now been re-designated as 6135 and 6136 in SOC 2020, but their data continues to be published in a combined table (Table 26) and, therefore, continuity with 6115 has been maintained.

The second change does, however, affect the data.  As part of the restructuring of the SOC, the weighting applied to each occupational group has been adjusted.  There has only been a slight adjustment to the weightings applied to the groups for care workers, but this means that (while they remain very similar) 6145 and 6146 in SOC 2010 are not directly comparable with 6135 and 6136 in SOC 2020.  This change is caught by the reclassification/change of methodology provisions in the PPOs and it is necessary to apply the formulas in those provisions when recalculating the amount of the periodical payments.  For those responsible for recalculating payments, this will, for example, involve re-basing the annual amount of the payments before recalculating them.  In addition, as the revised data for 2021 has not been published under SOC 2010, you will need to assume that this was the same as the first release data for 2021 published under SOC 2010.

The increase in care workers’ earnings

Once the annual amount of the payments has been re-based, they will need to be recalculated by reference to the revised data for 2021 and the first release data for 2022 under SOC 2020 6135 and 6136.  The increases for the 70th to 90th percentiles range from 6.56% to 7.46% with the lowest increase being at the 80th percentile which is the default percentile and also the most common one.  The hourly rates are as follows:

 

Percentile

70th

75th

80th

90th

2021 revised

11.53

12.03

12.66

14.56

2020 first release

12.39

12.87

13.49

15.54

% increase

7.46%

6.98%

6.56%

6.73%

While these are substantial increases and the largest since the current PPO regime was introduced in April 2005, they are a reflection of the inflationary pressures that are affecting the wider country.  They are also lower than the increases which are now commonly being seen in privately funded care packages.  The explanation for this difference is no doubt multi factorial, but it will be due in part to the fact that the data relates to earnings in April this year and also to the fact that the ASHE rates will be heavily influenced by the rates paid by statutory authorities and, in particular, local authorities for social services care.

In any event, the increases are considerably below the default PPO index of RPI which was 11.1% in April (the month that the ASHE data relates to) and increased to 12.6% in September (the month that most PPOs are linked to).  Indeed, the position remains that PPO claimants whose care payments are linked to RPI have received distinctly higher increases than those whose care payments are linked to ASHE.

Summary

The latest ASHE data includes a reclassification/change of methodology which will complicate PPO recalculations.

As expected, the annual increase in care workers’ earnings and, therefore, the amount of the ASHE linked payments is quite high, but below increases seen in privately funded packages and considerably below RPI.

Authors

Richard Stallard

Richard Stallard

Birmingham

+44 (0)121 698 5369

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