The government has been warned that George Osborne’s new minimum wage for carers could prove to be a “catastrophic failure” if all costs are not fully funded.
In a letter to parliament, the UK Homecare Association (UHA) said it welcomed the government’s commitment to low-paid workers, but said it estimates that “to address the existing under-funding of homecare and implement the National Living Wage will require an increase of at least £753m from councils and the NHS in the first year alone”.
“While many business sectors will be able to pass on additional wage costs to their customers, local councils, who purchase over 70 per cent of all homecare, consistently use their dominant purchasing power to push rates paid for services well below their real cost,” the UHA wrote.
The group cited a recent Freedom of Information request it made, which revealed that councils paid an average of £13.66 per hour for older people’s homecare, whereas it estimates that the new Living Wage will require councils to pay at least £16.70 per hour.
The UHA urged politicians to address the increase to the social care wage bill through the forthcoming Spending Review, and called for the VAT exemption for welfare services to be changed to zero-rated status, consider tax incentives for private individuals funding their own social care or for family members where they do not meet the financial eligibility criteria for state-funded social care
“Without urgent action from government and local councils to address the deficit in funding, continued supply of state-funded homecare will become unviable,” warned the organisation.