A new “national living wage” of £7.20 an hour for workers aged 25 and over is to be introduced from today, sparking last-ditch calls from the social care sector for additional government money to fund the increase.
Chancellor George Osborne announced the higher rate of pay in his budget last summer, up 50p from the current minimum wage of £6.70 for this age group.
His plans revealed that the so-called “national living wage” will also be raised further to over £9 an hour by 2020.
Since the announcement, providers have made repeated warnings that the policy risked causing a “catastrophic collapse” of the care sector.
They have argued that, while they want to pay their staff more, the sector is already under financial strain due to the gap between funding provided by local authorities and the cost of providing care.
As the new hourly rate is brought in today, membership organisation Care England again warned again about underfunding in the sector and the potential closure of providers as a result.
Martin Green, chief executive of Care England, claimed the government had taken “little responsibility” for the loss of services so far in parts of the sector and said for some organisations the new minimum wage would be the “final straw”.
“The introduction of the national living wage presents an additional, unfunded, statutory cost threatening the sustainability of the social care market, heaping pressures onto care providers and ultimately residents and the NHS,” he said.
Professor Green added: “Care workers are our biggest resource, and we want to pay them accordingly.
“The national living wage presents an additional, unfunded, statutory cost threatening the sustainability of the social care market”
“We have been supportive of establishing a living wage, but have underlined this can only be done when the government funds social care sustainably. At the eleventh hour, this still has not taken place,” he said.
The Local Government Authority echoed Care England’s concerns, saying there was a “real risk” that local councils would struggle to pay the increased costs associated with the new minimum wage rates.
Izzi Seccombe, community wellbeing spokeswoman at the LGA, said: “Councils fully support proposals to introduce a national living wage to help ensure care home staff receive a fair day’s pay for a fair day’s work.
”However, the cost of implementing it will significantly add to the growing pressure on services caring for the elderly and disabled which are already at breaking point,” she said.
Ms Seccombe said additional money raised from government proposals to allow a 2% increase in council tax in 2016-17 would not be enough to both cover the new rates of pay and increasing care provider costs.
“A lack of funding is already leading to providers pulling out of the publicly-funded care market and shifting their attention towards people who are able to fully fund their own care,” she said.
The LGA reiterated its call for the government to bring £700m of new funding earmarked for social care through the Better Care Fund by the end of the decade forward to this year.