The five largest care providers in the UK have expressed huge concerns over the introduction of the National Living Wage in a letter addressed to the Chancellor. It has been widely reported that this could potentially lead to the financial collapse of a number of care homes, with staff costs already accounting for more than 60 per cent of old age care expenditure.
While the letter stresses that the providers do not oppose the principle of the National Living Wage, its implementation has arguably come at a difficult time for some care homes, who are already under tremendous pressure from stricter regulatory demands.
Recent Care Quality Commission (CQC) statistics indicate that nearly half of UK care homes are 'not up to standard'. However, these statistics reflect a shift in what the CQC considers acceptable standards in light of the introduction of the new and updated Enforcement Policy earlier this year.
The Health and Social Care Act 2008 (Regulated Activities) Regulations 2014, are also now much more robust and inspections under the new regime clearly take a more hardened stance. It appears that more care providers are receiving lower ratings which could lead to enforcement action such as suspension or cancellation of the provider’s registration. Such ratings can also be detrimental to a provider’s success through the loss of business or negative publicity.
As such, some care providers are already having to work harder to maintain their compliance. The National Living Wage will likely be putting an even greater strain on providers’ financial resources, in terms of the investment needed for staff training and retraining, upgrades to the provider’s location and equipment, and improvements to its policies and procedures, such as quality monitoring and auditing systems.
If the care sector is expected to find the additional resources to accommodate the increase in the minimum hourly rate introduced by the National Living Wage, there may be a drop in the available budget for front-line care.
This could mean that care homes are less able to meet the fundamental standards set out in the 2014 Regulations and lead to a further increase in the number of care homes deemed to be ‘Inadequate’ at future inspections by the CQC.
By Laura Hannah, Solicitor, Regulatory team
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