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Care homes warn Chancellor of ‘catastrophic collapse’ over living wage

Think-tank slams plans to pay care workers £15 p/h

“If every English adult social care worker was paid £15p/h the wage bill in this sector alone would be around £10bn per year more than now.” That is the conclusion of a new report criticising Labour’s plans to introduce “sectoral collective bargaining” (SCB) (also known as “Fair Pay Agreements” (FPAs)), if elected.

Published by the Policy Exchange, the One size fits all report cites research stating that an FPA in social care will “significantly reduce employers’ power over pay” and transfer “some control and autonomy to the government and unions.”

It says that almost half of the mooted £10bn extra pay bill – £4.2bn – would fall on the taxpayer, funded via local authorities. If these additional costs were to be funded by a rise in council tax, this would result in a 10.9 per cent increase in Council Tax.

The extra wage spend would increase public spending by at least £4.23 billion per year – £21 billion more over a parliament and it notes that a similar policy, when enacted in New Zealand, was calculated by the OECD to reduce GDP per capita.  

In an FPA, all businesses across a given sector are obliged by law to agree common levels or floors of pay, conditions and hours across their industry with the relevant trade unions. This will apply even if those unions represent only a small part of the sector’s workforce.  If unions and employers’ organisations cannot reach an agreement, the government can step in and command one.

In reply to the report, Care England CEO Professor Martin Green said: “It is incumbent upon the next Government to finally deliver meaningful workforce reforms and make social care a truly attractive destination for staff. While there may be considerable upfront cost involved in doing this, it pales in comparison to the cost we will bear as a society if we continue to kick the can down the road.”

Policy Exchange has been described by conservative news and analysis site Conservative Home as a top most influential think tank in Westminster.”

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