What the new living wage means for social care

Topics covered: Ridouts professional advice

For many, the implementation of the new living wage by the Chancellor from Wednesday’s budget is something to be celebrated, seemingly improving the lives of many. However, amidst the celebration, many people have serious concerns about the long term effects of its introduction, and of its implications especially in the health care sector.

Although care providers have been calling for an increased living wage to be paid for some time now, such an implementation will only be viable if the largest customer of care services, the government, were to pay the cost of care. In a recent investigation, Shadow Social Care Minister Liz Kendall reveals that more than half of care companies being investigated by custom officials are currently paying their workers less than the minimum wage. Figures show that nearly 220,000 care workers are being paid less than they deserve by both providers and local authorities, as they refuse to pay for anything other than the time that staff spend with care service users. This means that training, management and travelling time are not considered at all, resulting in workers essentially being paid less than the minimum wage for the time they put in.

Cost cutting methods like this utilised by local authorities feeling the squeeze will only be compounded by the implementation of a new living wage to a sector which can barely afford the old one. The Local Government Association warns that as a result of the revised wage, the biggest impact would be felt in: “outsourced contracts for provision of social and residential care, which councils say would have to be renegotiated to take into account the fact that many workers in the sector earn less than £7.20 an hour.” A predicted sum of costs would involve around £330 million in 2016, with fears that in order to accommodate this increase in expenditure, up to 60,000 jobs may be lost.

This is happening at a time when the number of people needing care is increasing. Care providers want to see more funding going into the health and social care sector instead of what is currently occurring, with the adult social care budget being reduced by £500m alone this year.

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