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Living wage could close care homes

Closures could lead to greater GP workload, warn providers

Adrian O'Dowd

Thursday, 20 August 2015

The proposed National Living Wage could lead to a major care provider collapsing in the next 12-24 months, according to five of the UK’s largest care providers.

Four Seasons Health Care, Bupa UK, HC-One, Care UK, Barchester, and Care England, which represents a broad range of providers, have written a joint letter to Chancellor George Osborne to highlight the issue, warning of a “catastrophic collapse”.

Last month, Mr Osborne announced his intention to introduce the National Living Wage which will mean all workers aged over 25 will be paid a minimum of £7.20 an hour from April 2016, rising to £9 an hour by 2020.

The care providers have calculated that the additional impact of the living wage on the sector could reach £1bn by 2020, with staff costs representing over 60% of the costs of care – although for more complex care this can rise to 80%.

Care homes in England currently care for more than 400,000 older people and the providers said a collapse of a major provider could lead to many frail older people being forced to seek support in the NHS.

GPs and other NHS providers would be left to deal with the considerable impact of a care provider closing in addition to their existing work pressures such as seasonal flu outbreaks, or winter beds pressure, said the letter.

Although the care sector welcomed the National Living Wage, they called on the government to provide adequate funding to ensure that the rise in care costs could be met.

They cited figures from LaingBuisson that showed the gap between local authority care home fee rates for older people and the cost of providing care has continued to widen over the past five years.

Professor Martin Green, chief executive of Care England, said: “The care sector welcomes the National Living Wage and has long campaigned for it to be introduced. However, it is not sustainable for us to meet the increased cost of care when local authorities are already paying well below the true cost of delivery.

“We want to work with the government to find a solution that will ensure the 400,000 people the care sector supports can continue to live in a safe and comfortable environment in their older years.”

A government spokesman said: “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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