Friday 22 March 2019
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Living wage threat to care homes

Paying the National Living Wage will be the "last straw" for some care homes already struggling with rising costs, providers have said.

Paying the National Living Wage will be the "last straw" for some care homes already struggling with rising costs, providers have said.

A Gloucestershire care home closed, citing the "substantial increase in costs" it would bring. Campaigners have said one in four homes could face closure when the living wage is introduced in April.The government says it is making up to £3.5bn available for councils to cover the extra cost of social care.

When Chancellor George Osborne announced that a living wage would be introduced from April, he said it would mean a "direct pay rise" for 2.5m low-paid people.

However, care homes are often run by charities or non-profit companies, and nearly half of the care bills are paid by local authorities.

Joyce Pinfield, who runs a care home in Clevedon, Somerset, said councils "just can't afford to pay higher fees that reflect the true cost of care".

Over five years she has seen council payments fall, regulation get tighter, insurance rise and new standards bring the need for modernisation. Many care homes are contributing to staff pensions for the first time.

All these things are good things," Mrs Pinfield said, "but they all cost money, and the national living wage is just the last straw."

She pays her most junior staff at least 50p an hour above the minimum wage of £6.70. But when the new living wage comes in, £7.20 will be the norm. Care homes will face a 7% rise in wages every year, for four years.

Of 200 members surveyed, the National Care Association said, 24% expect to "exit the market" unless finances improve dramatically.

'Tipping point'

Chris Davies, chairman of Somerset Care, a non-profit company running care homes across the south of England, took the decision to close The Priory nursing home in Tetbury.

He said: "The state has to fund the bill for the people that it supports in care homes, or those very staff will suffer.

"We will have to ask our private residents to pay more ... It is possible, and the market will bear it, but I really don't think it is fair."

The government says it is allowing councils to raise more via council tax to meet the costs of social care - as well as making more funds available via the Better Care Fund, a joint pot of money used by councils and the NHS to support care services.

"Councils will have almost £200bn to spend on local services over the lifetime of this parliament," a Department of Health spokesman said.

"The National Living Wage will benefit hundreds of thousands of care workers and help attract new workers to the sector".