30 March 2016 | Herpreet Kaur Grewal
The introduction of the National Living Wage (NLW) this week will push services caring for the elderly and disabled to "breaking point" and bring a care provider crisis closer unless new funding is made available, say council leaders.
The Local Government Association said councils support the NLW - which comes into force on 1 April - but warns that it risks destabilising the care provider market by adding a significant cost burden to the social care system. Councils have already had to close a £5 billion funding gap in social care since 2010 and are struggling with mounting pressures.
The NLW will see employees over the age of 25 paid a minimum of £7.20 per hour. The rate is 50p per hour more than the current national minimum wage, which will still be the legal minimum rate to be paid to those between 21 and 25.
The LGA has previously estimated that it could cost councils an absolute minimum of £330 million in 2016/17 to cover increased contract costs to home care and residential care providers, but it now warns that the true cost is likely to be much higher.
Previous LGA analysis indicated that council tax rises to increase funding specifically for social care will bring in about £372 million in 2016/17. The LGA says that some councils will see all of this extra money swallowed by the cost of the NLW. For others, it will not be enough to cover increased care provider costs, let alone cover the cost of other pressures within the system and protect social care services from any further cuts.
As a starting point, the LGA is calling on the government to bring the £700 million of new funding earmarked for social care through the Better Care Fund by the end of the decade forward to this year.
It will also be organising urgent talks with care providers to tackle growing concerns that the worsening social care funding crisis and the introduction of the NLW will see care providers pulling out of the market or going bust.