UK Homecare Association warns of ‘catastrophe’ when higher wage begins

Osborne’s £9-an-hour Living Wage ‘will be a disaster for home care’: Extra £750million will be needed to meet financial cost of higher pay for staff.

• UK Homecare Association warns of ‘catastrophe’ when higher wage begins
• National Living Wage will see minimum pay for over-25s reach £9 by 2020
• The average wage of care workers in Britain is currently £6.78 an hour
• Around £750million could be needed to meet the spiralling funding deficit

The National Living Wage could be ‘catastrophic’ for home care, experts have warned.

An industry association claimed an extra £750million of public funding may be urgently needed to meet the financial costs of a higher wage for staff.

Around half a million over-65s in the UK rely on home support for basic tasks such as eating and getting dressed.

In a letter to the Government, the UK Homecare Association (UKHCA) warned of a spiralling funding deficit when the Chancellor’s flagship policy comes into force.

The letter, seen by the BBC, claimed ‘there is a serious risk of catastrophic failure’ if councils do not provide care firms with extra funding.

In his Budget this month, George Osborne announced workers over 25 years old will be paid a minimum of £7.20 an hour from April 2016, rising to £9 by 2020. The current minimum wage is £6.50 an hour for over-21s.

Most home care is purchased by local councils, but the UKHCA fears the size of contracts will not be enough to pay the higher wage. 

The association even claimed that to make its industry viable, council chiefs would need to fork out a minimum of £16.70 an hour to cover wages and other costs. They currently pay an average rate of £13.66 per worker, which is used to cover wages, transport, pension contributions and the running of the service.

The average wage for a care worker in the UK is £6.78 an hour, according to workplace analysts PayScale. But the Resolution Foundation think tank says more than ten per cent of care workers – or 160,000 people – do not even receive the current minimum wage because they are not paid when travelling between clients.

The letter called for ‘urgent action from government and local councils to address the deficit in funding’, warning it may soon become ‘unviable’.

UKHCA policy director Colin Angel told the BBC: ‘There is certainly anxiety that providers will be going out of business and that those providers won’t be there to carry on delivering services to some of the most frail and vulnerable members of society.’

Treasury officials say Mr Osborne’s policy will mean a pay rise for 2.7million people.

A government spokesman said: ‘The National Living Wage will benefit hundreds of thousands of care workers who will see their pay increase. The overall costs of providing social care will be considered as part of the spending review later this year.’

A group supporting small shop owners also believes the wage increase will leave businesses out of pocket. James Lowman, of the Association of Convenience Stores, said: ‘The move to a higher compulsory national living wage will have a devastating impact on our sector.

‘The Chancellor must face up to the impact of the national living wage on businesses.’

Some charities believe the policy does not go far enough. Advocates from the Living Wage Foundation, a charity promoting higher wages, believe £7.85 an hour is the minimum needed to survive in the UK. For London, this rises to £9.15 an hour.

Original source: Mail Online 28/07/2015