Living wage threat to care homes.

There could be a "catastrophic collapse" in the number of care homes if the National Living Wage is introduced, according to the five biggest providers.

They say, in a letter to chancellor of the exchequer, George Osborne, that staffing accounts for 60 per cent of the cost of care and, although they support the National Living Wage, efforts would be needed to “rescue” the care system if it were introduced.

After is election victory in May, the government said social care would be considered as part of the spending review later this year which may introduce the National Living Wage.

If the National Living Wage is introduced, UK workers aged more than 25 will be paid a minimum of £7.20 an hour from April next year, rising to £9 by 2020, according to plans outlined in the Budget.

Four Seasons Health Care, Bupa, HC-One, Care UK and Barchester said the measure would cost the care sector £1bn by 2020 and warned that any shortage of care places could put huge pressure on the NHS.

Chief executive of Care England, which represents the industry, Martin Green, said: "Without adequate funding to pay for the National Living Wage, the care sector is at serious risk of catastrophic collapse."

He added that, if the National Living Wage were introduced, there was a "grave and very real possibility" that a provider could fail within the next two years.

Mr Green said: "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."

A similar warning was given earlier this summer by The UK Homecare Association which said that the measure would make care for people in their own homes "unviable.”  

A government spokesman said: "The National Living Wage will benefit hundreds of thousands of care workers who will see their pay increase.  The overall costs of providing social care will be considered as part of the spending review later this year and we are working with the care sector to understand how the changes will affect them."