George Osborne warned about impact of imposing the living wage

LONDON, ENGLAND - OCTOBER 28:  Chancellor George Osborne departs Downing Street on October 28, 2015 in London, England. Yesterday Chancellor George Osborne promised to bring tax credit spending under control despite suffering a  defeat in the House of Lords last night. (Photo by Ben Pruchnie/Getty Images)

Care home leaders are warning that around 200,000 residential beds could become unviable as the national living wage drives up staffing costs.

Representatives of major groups including Bupa, Barchester, Care UK, HC-One and Four Seasons have written to the chancellor of the exchequer George Osborne demanding to be consulted on how the living wage will be implemented.

They claim that the hourly rise to over £9 per hour by 2020 will mean every residential care bed will cost an additional £18.

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The wage rise comes on top of rising costs of compliance to CQC standards and higher registration costs that come into effect in April next year.

HC-One chairman Chai Patel supports rising wages, but hints that they must be accompanied by other changes to the way authority funding feeds into the industry. “Paying a living wage is the right thing to do – carers completely deserve it – but government must act now or risk having multiple providers go under.

“After five years of flat and falling fees, the industry could not absorb a big increase in staffing costs

Allied Healthcare has published a report that suggests government support is needed to stave off a “care catastrophe”.

Tim Pethick, executive chairman of Allied Healthcare said: “Paying the national living wage to our dedicated care workers is absolutely the right thing to do, but there is a major challenge that needs to be addressed.

“Local authorities are increasingly being forced to auction out care contracts to the lowest bidder or contract at rates that are simply uneconomical for care providers.  This race to the bottom is creating a flight away from quality.”

The Allied Healthcare report goes on to suggest that the crisis could be averted if the Treasury ploughs back some of the additional national insurance money that it would collect from higher wages into the care sector.

 

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