The UK HomeCare Association has said that an increase in staff costs could see a lot of businesses go bust.
In a letter to chancellor George Osborne the UK HomeCare Association, that support 880,000 older people with disabilities has warned that the costs of the “national living wage” could trigger a “catastrophic failure” in the homecare market, reports the Guardian.
Their concern is that lack of increased funding will mean that businesses will go bust after increasing staff costs to that of the national living wage.
The UKHCA says meeting the living wage bill will require a £753m increase in funding from councils and theNHSin the first year alone. It says local authorities currently pay homecare providers an average of £13.66 an hour, but estimates that the new arrangements will cost it £16.70 an hour.
The letter states: “As major providers in the homecare sector, delivering together over 47m hours of homecare care a year, we welcome [the] government’s commitment to low-paid workers through a new National Living Wage. However, unless the additional costs are fully funded, there is a serious risk of catastrophic failure to support people who receive state-funded care at home. Market exit by providers would cause considerable distress for people who use homecare services and their families; create a significant burden for local councils who would have to find replacement providers and provide uncertain employment prospects for trained and committed careworkers.”
UKHCA policy director Colin Angelsaid: “Providers are particularly concerned that they’re not going to be able to deliver services to people who are funded by local authorities. 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.”
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, and we are working with the care sector to understand how the changes will affect them.”
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