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Care home chiefs warn of sector 'collapse' from living wage plan


The care sector risks “catastrophic collapse” if government plans for a national living wage for staff are brought in, industry providers have warned.

Five of the UK’s largest care organisations have written to chancellor George Osborne claiming the plans could lead to a major provider closing within one or two years if funding from local councils is not increased.

“It is not sustainable to meet the increased cost of care when local authorities are already paying well below the true cost of delivery”

Martin Green

In Mr Osborne’s budget earlier this summer, he announced  a new “national living wage” for people over the age of 25 that would rise from the current £6.70 an hour to £7.20 in 2016, and then to £9 by 2020.

But the firms Four Seasons Health Care, Bupa UK, HC-One, Care UK, Barchester and the over-arching membership organisation Care England said the additional impact on the sector could reach £1bn by 2020.

They said staff wages currently account for over 60% of the costs of care, and in more complex cases this can rise to 80%.

The care sector wants to pay its staff more, but the government must increase funding to help close the gap between what the local authority pays and the cost of providing care, they said.

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.

Professor Martin Green care homes

Professor Martin Green

“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,” he said.

He added: “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.”

Professor Green told the BBC: “Without adequate funding to pay for the national living wage, the care sector is at serious risk of catastrophic collapse.”


Readers' comments (20)

  • Typical private companies crying because thier profit margins will be hit

    Leave healthcare to the NHS and not greedy private companies...I hope you do go out of business!!

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  • How sad that the carers who do this job are so undervalued. I wouldn't do what they do for the wages they get. We should treasure and reward carers. The sorry irony is that if the big healthcare providers do go out of business, the carers' jobs will go along with them.

    I returned to nursing after a break and - like many - my route was agency - NHS bank - NHS part-time - NHS full time. My first night back, in a private care home, I was both shocked and bewildered by a notice on the wall explaining to the staff that their wages would not go up unless occupancy increased. It seemed to me that the residents were just so many profit-making units and might just as well be bottles of pop. The carers were wonderful, of course - most of them were doing this job because they got satisfaction from looking after people. Yes, many of them do it because it's the only thing they can fit round child care so that their spouses can mind the children, as it's impossible to fund childcare if you don't earn good money. But all the more reason for trying to keep this precious resource. A good carer is like gold. Their wages should reflect that.

    I can't believe that huge national companies can be that short of money if they keep opening new care homes. What an utter disgrace that they are reluctant to pay a living wage. Not just a minimum wage. The clue is in the name.

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  • I fully agree that good carers are worth every penny ,they often know a lot more than they are given credit for and it's about time they are rewarded for their hard work,however I do wonder where that leaves trained staff who won' t be paid much less than untrained staff, I fear the profession will suffer great losses as a result only time will tell

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  • Anonymous | 20-Aug-2015 2:41 pm

    Your attitude is disappointing because a) it is quite common and b) it is utterly wrong and misguided. Neithervthe NHS nor local councils can provide nursing care beds at the fees paid to private providers - the few that still try to do so pay themselves 50-odd percent more than they pay us per bed per week.

    Why is "profit" such a dirty word? Would "surplus" enrage you less? It's the same thing. If you'd like to take over responsibility for our £2 million bank loan and wages for 50+ people, perhaps you'd learn a little more about "greedy" private companies.

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  • All that will happen is that carers over the age of 25 to whom the higher rate of pay will be applicable will largely disappear from the books of these employers.CV applications will be sifted on the basis of age (under the radar of course!) and if you're under 25 you will get an interview and a job. The turnover for staff in these big employers is huge.I used to work for Barchester as a Nurse, I lasted 3 months before I finished with them in total disgust!! They exploited their low paid staff and used them mercilessly.The home I was working in was found wanting in every area by CQC and there are lots of these inadequate homes run by these big employers.They are often run and staffed by agency because their own staff leave within 6 months.
    They will staff the homes with 16-18 yr olds allegedly on 'apprenticeships' as routes into nursing.

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  • I agree with the person above who refers to the disappointing attitude of the NHS & Social Care towards care homes. I was a senior community nurse until a few months ago and was, I admit, guilty of this thinking myself. I now manage a nursing home. Wages equate to between 50 & 60% of income, food, utilities, council tax etc a further 25%. The remainder is ploughed back in to keep equipment up to date and functional, on training, on improving the Home and grounds, BUT a large proportion of this is also taken up by council and NHS payments which are 1/3 less than privately arranged placements, thus ensuring that there is no surplus with which to keep our environment and services up to standard. As for pay rises.... of course we would need to increase either fees or occupancy to fund them - unlike the NHS, we have no option than to work within our means, and their increased funding doesn't head towards quality care in pleasant environments for our end of life patients.
    Incidentally, all of our trained nurses are fully up to date, with relevant post grad courses relevant to our work, with training uptake throughout the staff excellent. It' stone the NHS recognised that there are other dedicated nurses outside of the NHS who really care about looking after the elderly that cannot care for themselves, even with support. They may also like to consider that trained staff in nursing homes work equally long hours to their NHS equivalents, are rarely paid much above a mid-band 5, and get no sick pay other than SSP, -NHS be grateful for what YOU get and stop criticising colleagues about whom you know very little.

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  • All private companies think about is profit, they pay thier staff next to nothing,then when it all goes wrong, they hand the service back to the NHS and walk away

    I wish the govt would bring in this min wage next month at £10 an hour

    winterbourne ring any bells

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  • These private companies make my blood boil

    I worked as a community nurse in South Yorkshire...we were taken over by a private company

    All our terms and conditions were supposed to go with us...yep straight away they reduced the out of hours pay, my salary and holiday days

    They go in with a very low offer...then once thier foot is in the door and they get the contract...redundancies come along and reductions in pay

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  • Anonymous | 21-Aug-2015 10:16 am

    I'm not familiar with the contract you refer to, but it sounds like you should be blaming the trust that negotiated the deal.

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  • Anonymous | 21-Aug-2015 10:01 am

    "All private companies think about is profit..."

    And all the NHS thinks about is "creating a surplus" - exactly the same thing.

    The NHS can't/doesn't pay £10/hr - even though they pay themselves far more for the same services whilst they're providing them - why do you think private companies could so?

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