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Strain placed on care homes as increased living wage is introduced – here’s how we’re helping

Author: Educare Staffing | Posted: 15th November 2016 | Category: General News

The National Living Wage, which was introduced in April this year, currently stands at £7.20 an hour for workers aged 25 and over, and has resulted in increased financial pressure for care homes, particularly for smaller homes, a report says.

Reduced funding and rising costs from local authorities have come as the demand for places at care homes has grown.

A report by the Care Quality Commission (CQC) in October showed 2,444 residential care homes closed between October 2010 and December 2015, with 1,433 being smaller care homes.

‘12% of care homes have at least a 30% chance of going insolvent within the next three years and that care homes have been under extra financial strain in recent years’ says accountancy firm, Moore Stephens. Mike Finch, restructuring partner at Moore Stephens says “It’s become increasingly difficult for care homes, particularly smaller providers, to keep up a consistently high level of care whilst breaking even or worse, remaining solvent,”

“The introduction of the living wage has increased the financial pressure on care homes to even higher levels, and this is only likely to continue as the living wage keeps increasing to reach the target of £9 by 2020.”

“This is creating an unsustainable situation in a lot of care homes, where more staff is needed to cater for the increase in demand but the money simply isn’t there to cover rising staff costs. “Cuts to local authority fees have meant that care homes have had to cope with an increasing proportion of the financial burden.”

Although steps are being taken to improve funding for adult social care through the government’s Better Care Fund, with the option for local authorities to raise council tax by 2%, many care home providers are concerned that this will not go “far enough”.

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Educare Staffing