Consultation outcome

Impact assessment – DHSC further analysis and information

Updated 10 December 2021

This note sets out the Department of Health and Social Care’s (DHSC’s) initial consideration of the concerns raised by Regulatory Policy Committee (RPC) in relation to the impact assessment (IA) for the vaccination as a condition of deployment (VCOD) policy. The IA has been published as part of DHSC’s commitment to ensure Parliament has access to our assessment of impacts before a vote on the regulations take place. However, given the urgency of these measures it has not been possible to formally respond to the concerns the RPC has raised and provide a revised IA. This process usually takes 30 working days.

The role of the RPC is to scrutinise IAs and give an opinion on their assessment of the costs to businesses and consideration of impacts on small and micro businesses (SMBs). The rating is not an assessment of the policy objective, but an assessment of the underlying evidence of the impacts on business, including SMBs.

The key concerns raised relate to the suitability of assumptions used to estimate the costs of replacing staff and the consideration of possible mitigations for small independent providers in scope of the regulations. The RPC has asked for:

• further evidence that the recruitment cost DHSC has used for the cost to replace unvaccinated workers is a good proxy across all settings

• further evidence on the specific impacts and potential mitigations for independent health providers in scope of the regulations, especially small businesses, including evidence that excluding unvaccinated staff from health and care services will not result in critical staffing shortfalls, or sufficient evidence that such shortfalls could be avoided

The government has consulted on the regulations and received over 34,000 responses. The aim of the policy is to help protect vulnerable people who use services and the health and social care workforce. As set out in the government’s response to the consultation, concerns were raised during consultation on the workforce impacts if staff are no longer able to be deployed once vaccination requirements are in force because workers remain unvaccinated and are not exempt.  Where there is a smaller workforce, the impact of workers not being able to be deployed will be proportionally larger. This could make smaller providers unable to continue to provide services if workers are unable to be replaced. This is considered further below. The department is continuing to engage with the independent health sector to ensure appropriate mitigations are in place for small businesses.

Taking each of the RPC’s red rated categories in turn:

RPC concern 1: unsupported assumptions

The unit cost assumptions are overly simplistic, given the diverse number of sectors, businesses and staff affected by the measure. Further justification is needed that these simplified unit costs are reasonable estimates of the average costs across the diverse sectors, or an explanation of why their use is proportionate. Further scenario and sensitivity analysis needs to be included, to illustrate how sensitive the overall costs are to these assumptions. In addition, the evidence on the number of workers who would need to be replaced should be supported by a better evidence base – preferably using evidence from similar measures internationally.

DHSC initial response

There is likely to be some variation in typical recruitment costs across roles and sectors. The recruitment costs used for health care settings was based on the time and resources (staffing) used to recruit a Band 5 nurse in the NHS, the department used this as a proxy for all healthcare staff and settings for the following reasons:

• nurses form the largest staff group of the projected unvaccinated workforce under all 3 scenarios

• Band 5 nurses’ wages are approximately average relative to all healthcare staff and these are used to estimate the overall costs of the policy

• the breakdown of the recruitment costs in terms of administrative costs incurred, line manager time costs, and inductions costs are largely similar between different staff groups

Further engagement with stakeholders including representatives of independent sector suggests the figure is dependent on the role being recruited to and no hard data is available so is a reasonable benchmark in absence of other data. We believe the use is therefore justified. The independent healthcare sector accounts for around 17% of total recruitment costs, so an illustrative 10% lower recruitment cost for businesses would add around £3 million to the overall costs of the policy.

The social care recruitment figure is similarly based on evidence from the sector and we have since had further engagement with the sector on this estimate. Around 90% of non-residential social care providers (those in scope of these regulations)^{[footnote 1]} are considered to be small or micro, and so the unit cost estimate is likely to represent that of a typical provider. Larger firms may benefit from economies of scale though so this estimate may be an overestimate for them.

The unit cost of recruitment is based on an estimate considered as ‘business as usual’ and costs may have increased since due to the current labour market conditions. However, by definition, any increase in unit cost will have a pro-rata impact when scaled up.

RPC concern 2: full consideration of impacts to small and micro businesses

The IA must consider if the current challenges that SMBs face in comparison to larger health and social care employers, including recruitment and retention, may be exacerbated by this measure.

The department must consider how the policy will affect civil society organisations (CSOs cover charities and non-for-profit organisations) and their volunteer staff who may have contact with patients.

The IA does not include appropriate consideration of mitigation alternatives for SMBs, such as regular testing, (particularly for workers who may have some, but not frequent contact with patients). The IA must provide further details of consideration of mitigations, or justification of why potential mitigation would not be appropriate.

DHSC initial response

As set out in the government’s response to the consultation and impact assessment, we recognise that there will be workforce impacts if staff are no longer able to be deployed once vaccination requirements are in force because workers remain unvaccinated and are not exempt. Over 99% of independent health providers are classed as self-employed, small or micro business.^{[footnote 2]} Where there is a smaller workforce the impact of workers not being able to be deployed will be proportionally larger. This could mean smaller providers are unable to continue to provide services if workers are unable to be replaced. This situation could be exacerbated where an individual or small numbers of individuals are integral to the business (for example, sole traders).

Further, the consultation received around 34,900 responses including responses from major representatives of the independent health and care providers (Independent Health Providers Network, IHPN), private acute hospitals (for example, BUPA) and charities (for example, Age UK). These did not raise any specific challenges facing SMBs above the workforce impact concerns which were a consistent theme from respondents. However, the department recognises there may be specific challenges facing small businesses and is engaging further with the sector to respond to the RPC’s concerns.   

The regulations apply to those providing Care Quality Commission (CQC)-regulated activities. This is more straightforward for NHS settings where there is robust data on numbers of staff in scope. However, not all private health and care businesses are covered by CQC regulations and this means that some businesses are excluded – for example, physiotherapists and only some staff in private businesses are in scope of the regulations. Identifying exactly which business activity, their employment size and therefore extent of challenge facing them is difficult from the data held centrally and we are continuing to work with stakeholders including CQC and CSOs in responding to the RPC’s concerns.

Potential mitigations for small providers could include:

• allow small business to be exempt

• put in place alternative arrangements, such as testing

• provide additional funding

We do not think an exemption for small business is appropriate. Equal application across all providers of CQC-regulated activity, whether large or small, is fundamental to this policy because there is no clinical justification to exclude or reduce the requirements on SMBs who are also providing health and care services to patients or service users who may be vulnerable. Such an exclusion would be likely to increase the risk of perverse incentives in movement of staff between organisations. Further guidance will be published to help support health and social care providers in implementing and complying with the regulations. DHSC will also encourage local health systems led by NHS England and NHS Improvement (NHSEI) to work together and share resources to maximise uptake over the winter months.

Testing, while an important part of managing the COVID-19 pandemic, does not provide the same benefits as vaccination in reducing infection. For example, a worker may not be infectious at the time of the test but throughout the day become infectious.  While this may be picked up at the next test, the infectious worker in the meantime has been in close contact with vulnerable service users. The effectiveness of testing also relies on conducting the test correctly and the accuracy of the test. Vaccination therefore provides a key defence to both the individual and vulnerable person when other infection prevention control measures fail or are not undertaken correctly. Testing would continue alongside vaccinations as part of infection prevention and control measures.

In addition, a further benefit of vaccination as opposed to testing is the expected benefit from reduced COVID-19 sickness absences. For example, pre-pandemic, absence levels in the NHS were 4.1%, but reached over 12% in the first COVID-19 wave in April 2020. The 7-day average to 1 December 2021 shows there was an average of 73,277 sickness absences in NHS trusts per day, of which 13,907 staff were absent for COVID-19-related reasons including the need to self-isolate. In reducing sickness absences, this would be expected to reduce costs to providers who have to source alternative staff where that is needed to continue the delivery of services.

While we recognise that there are costs to businesses, we do not consider additional funding arrangements would be appropriate in relation to this policy given the perverse incentives this may create for businesses in having unvaccinated workers.  We also do not think it would be equitable to provide funding arrangements for private business that could not apply to publicly funded service providers who would be equally subject to the requirements of the regulations.

Where charitable or voluntary providers are delivering CQC-regulated activities (for example, through holding NHS contracts with clinical commissioning groups) they would also be within the scope of the requirements. Again, there would be no clinical justification to exclude or reduce the requirements on these providers, who are also providing health and care services to patients or service users. Such an exclusion would be likely to increase the risk of perverse incentives in movement of staff between organisations.

Steps we are taking to support small businesses and voluntary organisations

Listed below are some of the steps we are taking, in collaboration with the NHS and adult social care sector, to mitigate the risks to small business and continue to encourage workers to take up the vaccine. This includes:

• the 12-week grace period, allowing time for both workforce planning, and for those colleagues who are not yet vaccinated, to make the positive choice to protect the people they care for, as well as themselves

• setting an enforcement date of 1 April 2022 to assist providers over the winter period and help minimise workforce pressures

• increasing the number and diversity of opportunities to receive the vaccine; using the booster campaign to make the most of walk-ins, pop-ups, and other ways to make getting the vaccine as easy as possible

• the NHS have already written to all providers providing early guidance setting out what VCOD means for the system, as well as advising on next steps to boost uptake and help ensure smooth implementation. Guidance has also been published by NHSEI to assist providers, and small businesses who facilitate NHS services, in preparation and planning

• increasing engagement with targeted communities where uptake is the lowest, including extensive work with ethnic minority and faith networks to encourage healthcare workers to receive the vaccine

• making available resources to aid in one-to-one conversations with unvaccinated staff, with clear guidance on how to do this

• reducing the time employers have to wait in order to deploy a worker – now a worker can be deployed 21 days after their first dose, rather than having to wait 8 weeks

• reducing the complexity of the exemptions process and recognising mixed doses and vaccines received abroad

Other RPC comments

The RPC has also commented on other aspects of the IA, in addition to the above impacts on business:

1. While the RPC consider the IA’s rationale and options satisfactory, they conclude the IA would be improved by considering the wider impacts of the policy on existing vaccinated staff who may also leave due to increased workforce pressures faced by vaccinated staff, competition, challenges facing rural areas and evaluation.

2. The RPC also suggested providing evidence in relation to similar policies implemented abroad. However, given differences, for example in policies and vaccinations rates, data is not available to provide robust and helpful international comparisons.

3. As part of the department’s response to the RPC, we will consider what further information could be added to an updated IA, to set out our consideration of these issues and help further improve the analysis provided.

1. The size and structure of the adult social care sector and workforce in England (skillsforcare.org.uk) ↩

2. Business population estimates 2020 (GOV.UK) ↩