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30.03.16

National Living Wage risks causing care funding crisis – LGA

The National Living Wage, which is due to be introduced this week, will risk pushing social care funding into crisis, the LGA has warned.

The LGA said that the cost of increasing the minimum wage to £7:20 an hour, which comes into effect on Friday, will be passed on to councils through increased contract costs to home and residential care providers, and will cost at least £330m in 2016-17 and could use up all of the £372m councils are raising from a new social care precept.

Cllr Izzi Seccombe, community wellbeing spokeswoman at the LGA, said: “Councils fully support proposals to introduce a National Living Wage to help ensure care home staff receive a fair day's pay for a fair day's work. However, the cost of implementing it will significantly add to the growing pressure on services caring for the elderly and disabled which are already at breaking point.

“Social care remains in crisis. Recent measures announced for social care will help but the immediate challenges remain. Councils will continue to do all they can to maintain the services that older and vulnerable people rely on but extra council tax income to pay for social care in 2016-17 will not bring in enough money to plug growing funding gaps and prevent the need for further cutbacks to social care services.”

Cllr Seccombe added that a lack of funding risks leading to providers switching to providing private care to individuals instead of working with public sector partners.

The LGA are organising a summit with care providers to unite calls for increased funding to compensate for the cost of the National Living Wage, including for the government to bring forward £700m of funding from the Better Care Fund.

The LGA warned ahead of the most recent Budget announcement that the National Living Wage is adding to the pressures on councils.

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