The home care industry is warning that the National Living Wage could result in a “catastrophic failure” in the market, with the UK Homecare Association (UKHCA) saying that unless extra money was put into the sector it would leave services “unviable”.
Around half a million vulnerable over-65s depend on home care support, which includes help with washing and dressing. The majority of care is bought by councils, but the UKHCA said that they do not pay enough for care firms to cope.
The group believes that the introduction of the National Living wage will require councils to pay a minimum of £16.70 an hour for services, which accounts for the cost of the National Living Wage, travel costs and pension contributions, with just under 50p set aside for profits.
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According to research from the UKHCA published earlier this year, the current average price is £13.66, which the group argues is not enough for current obligations for care providers to meet the minimum wage.
A letter, seen by the BBC, sent to Chancellor George Osborne said that unless extra funding is provided by councils “there is a serious risk of catastrophic failure” as some providers may be driven out of the market.
The UKCHA suggests that an extra £750 million in funding may be required next year to cope with the National Living Wage demands.
“Without urgent action from government and local councils to address the deficit in funding, continued supply of state-funded home care will become unviable,” the letter says.
UKHCA policy director Colin Angel told the BBC: “Providers are particularly concerned that they’re not going to be able to deliver services to people who are funded by local authorities.
“There is certainly anxiety that providers will be going out of business and that those providers won’t be there to carry on delivering services to some of the most frail and vulnerable members of society.”
Research from the Resolution Foundation also predicts up to 1m of the 1.4m workers across the whole care sector – that includes in care homes and those looking after younger disabled adults – could end up getting pay rises by 2020.
Laura Gardiner, from the foundation, said implementing the policy will “require significant investment” as the National Wage will be particularly “challenging” for the care sector.
She said: “It is unrealistic to expect councils to find this extra money given the scale of cuts they’re facing.
“It is important therefore that central government steps up and commits to providing this vital investment in social care, which will give a major boost to staff and improve the quality of care.”
A government spokesman responded to the BBC saying: “The National Living Wage will benefit hundreds of thousands of care workers who will see their pay increase.
“The overall costs of providing social care will be considered as part of the spending review later this year, and we are working with the care sector to understand how the changes will affect them.”
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