Living Wage - Family Carers to "pay double" ???

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George Osborne’s “national living wage” in the social care sector could bring a welcome pay rise for up to 700,000 workers – but only if the upfront costs of £2bn to the sector are met by public investment, experts say.

The centrepiece of the budget was a minimum wage rate for over-25s, to be set at £7.20 from next April and rising to about £9 by 2020. Analysis by the Resolution Foundation, whose work the chancellor name-checked when he announced the policy, shows that care-providers, who are heavily dependent on low-paid staff, would already have had to find £1bn to pay for increases in the minimum wage over the next five years. Now they will face an additional bill of £1.3bn by 2020. With much of the cost of care met by councils, that may prove difficult when funding to local government is likely to face a fresh squeeze in the chancellor’s latest spending cuts.
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Full details of Osborne’s plans will not be announced until the autumn spending review, but the Institute for Fiscal Studies calculates that “unprotected” areas of public spending – outside the NHS, schools, overseas aid and defence – would have to be cut by a further £19bn over the next five years.

In the longer term, Resolution’s research suggests that up to half of the cost of funding the new wage rate for care workers will flow back to the exchequer in higher taxes and reduced in-work benefits. But it is not clear whether that boost to the Treasury will find its way to the councils that will have to fund the higher wage floor. With up to 160,000 social care workers already missing out on even the existing legal minimum wage, Resolution warns that better enforcement will be needed to make the higher level stick.

Laura Gardiner, senior policy analyst at Resolution, said: “The new minimum wage is a welcome move towards tackling low pay, particularly in social care where at least 700,000 workers are set to benefit, but implementing it will be challenging in the care sector and will require significant new public investment. Failure to do this could result in a major escalation of the illegal ‘wage theft’ that already blights the lives of far too many care workers.
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“It is unrealistic to expect councils to find this extra money, given the scale of cuts they’re facing. It is important therefore that central government steps up and commits to providing this vital investment in social care.which will give a major boost to staff and improve the quality of care.”

The “national living wage”, as Osborne branded it, was the most eye-catching policy in Wednesday’s budget, softening the blow of £12bn of welfare cuts, which the IFS has warned will hit poorer households hardest. Some business groups, including the CBI, have responded with scepticism to the policy, which went further than a manifesto pledge from Labour for an £8 minimum by 2020.

Nadra Ahmed, chairman of the National Care Association, which represents the care sector, said providers were coming under increasing pressure as they faced increasing costs at a time when commissioners, including local authorities, were reducing funding per resident. “These are difficult times for providers as they take the brunt of the austerity cuts faced by local councils. Over and above that we have a recruitment issue which continues to deepen, which may become more difficult as the impact of reductions in tax credits are felt by the workforce.

“The important thing to realise is that providers of health and social care value their staff and would be delighted to meet their financial obligations, but they are hampered by the downward pressures on funding which year on year has led to a gap of over 6% between what is received and cost.

“Until the government is able or willing to address this issue we will see providers struggle.”

http://www.theguardian.com/society/2015 ... iving-wage

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