In a letter to Chancellor George Osborne today, the United Kingdom Homecare Association said the new minimum wage level, which is to be introduced at £7.20 from next April, would cost homecare providers at least £753m in the first year.
Councils currently pay an average of £13.66 per hour for older people’s homecare, but the additional wage costs will require at least £16.70 per hour to be paid.
However, the group said that it was unlikely to be able to pass these costs on to local authorities or the NHS, who are the main purchasers of care visits.
“While many business sectors will be able to pass on additional wage costs to their customers, local councils, who purchase over 70% of all homecare consistently use their dominant purchasing power to push rates paid for services well below their real cost,” the letter stated.
Without urgent action from central government or local councils to address the deficit, providers will become unviable and may close, creating the risk of “catastrophic failure” in the sector, the letter signed by 26 care firm bosses stated.
“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.”
As well as calling on the government to use the Spending Review to provide local authorities with additional funds to meet the minimum hourly rate, the group also called for regulators across the UK to be given powers to oversee the commissioning practice of local authorities. In particular, this should allow for assessment to be made of how local commissioning impacted on the viability of care markets.
