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Care providers count the costs of the incoming National Minimum Wage

By Care Home Management freelance writer Eleanore Robinson
Chancellor Jeremy Hunt announced in his 2023 Autumn Statement that the National Minimum Wage (NMW) would increase by 9.8 per cent to £11.44 per hour from next April for workers aged 21 and over.

The increase was based on the recommendation of the Low Pay Commission, which said that in “large low-paying sectors”, including social care, employers’ ability to pass on the increased costs is “highly constrained”.

According to LaingBuisson’s Care Cost Benchmarks model, the increase will add £49 per week to average staff costs for nursing care and £53 per week for residential care.

Furthermore, it calculated that care providers will require an average fee increase of around 5 per cent to compensate for this factor alone.

While care organisations have welcomed the move, they have also raised concerns about how care providers would absorb the costs.

The National Care Forum said that the uplift would be a vital boost to care workers’ income. However, it does not address the “fundamental lack of appropriate pay, terms and conditions for those working in this sector”.

Care England added that the care sector’s ability to adjust wages was “extremely limited” as around 60 per cent of care providers fees are determined by local authorities and the NHS.

Service users affected
The effect on service users of a lack of investment in social care has also been raised by the Association of Directors of Adult Social Services (ADASS).

Its president Beverley Tarka said that many older and disabled people will not now get timely care, support and safeguards.

For care providers almost exclusively relying on public funding for fees, this lack of investment is worrying.

Rachael Dodgson, chief executive of specialist care provider Dimensions, said that it would be talking with local authorities about uplifts in the new year.

She said: “We will be relying on local authorities to give us those increases. The increase to National Minimum Wage is really welcome. The gap between the National Minimum Wage and National Living Wage is closing.

Dodgson added that in her experience local authorities want to fund as much as they can but there is not much left to cut from their budgets to pay for this and they are reliant on central government for extra funding.

“There has to be some recognition of that. Central government has to support local authorities.”

Wage differentials
Of course, it is not just those on the lowest salaries who benefit from increases in the minimum wage. Those in more senior roles, such as assistant managers and managers, also expect wage differentials to be maintained.

Dodgson said: “It is also all those things you need to factor into it too.”

Dimensions has a workforce petition called Save Our Social Care, calling for support worker pay to be a minimum at NHS band 3 as there is some consistency across those roles.

Dodgson said that, as the NMW increase applies to all sectors, wages in areas such as retail and hospitality will also be going up, meaning social care workers have just as much incentive to leave to work in these industries as they do now.  

She explained: “We still can’t compete with hospitality and retail over pay. That is why our workforce petition is calling for social care to benefit from different rates of pay.

“From our perspective, until there is some differential between social care and these other sectors, it is not going to help as much as we need it to.”

Foreign worker restrictions
With government tightening immigration restrictions, no longer allowing overseas workers to bring dependents with them, the number of foreign workers in social care is expected to fall.

This will make recruiting and retaining a domestic workforce even more crucial for care providers.

Skills for Care found in its recent annual State of the Adult Social Care Sector and Workforce in England that being paid more than the NMW was one of the reasons people stayed in social care.

Dimensions is a Real Living Wage employer and Dodgson said doing this has “made a difference to vacancies in the sector”.

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