The five biggest providers of care homes have warned of a ‘catastrophic collapse’ in the industry if the National Living Wage is introduced.
The five, Four Seasons, Bupa, HC-One, Care UK and Barchester, have written to the Chancellor of the Exchequer, George Osborne, claiming that while they supported its introduction, staffing accounted for 60% of the cost of care and efforts would be needed to rescue the care system.
The government has already said that social care will be considered as part of the spending review later this year.
Mr Osborne announced in the Budget that workers over the age of 25 will be paid a minimum of £7.20 an hour from April next year, rising to £9 by 2020.
The care companies claim the increase in pay will cost the care sector £1 billion by 2020. And they warned any shortage of care places could put huge pressure on the NHS.
Professor Martin Green, chief executive of Care England, said: “Without adequate funding to pay for the National Living Wage, the care sector is at serious risk of catastrophic collapse."
He said there was a grave and very real possibility that a provider could fail within the next two years.
He added: "We want to work with the government to find a fair solution that will ensure the care sector can provide a safe and comfortable environment for older people who live in care homes."
Previously the UK Homecare Association posted a similar warning saying services to care for people in their own homes would become unviable.