National Living Wage Could Cause Collapse Of Britain’s £20bn Care Sector

Increased wage bill risks uprooting entire UK care sector

The new proposed living wage will have a damning impact on the care sector, forcing many independent operators out of business and leaving thousands of people without support, says leading health and social care management advisers Carter Schwartz.

The higher wage will only cover around 60% of staff, pushing labour costs up by 330m in the next year, rising to £1bn by 2020 – a cost that the care home sector simply cannot afford.

Adam Carter, managing director at Carter Schwartz explains: “Many care home operators already struggle to pay the minimum wage and continued local funding cuts are putting greater strain on budgets and limiting resources. With the funding gap expected to reach £4.3bn by 2020, the introduction of the living wage will only exacerbate the problem.

“With suggestions that some of the larger domiciliary care providers are operating on margins of under 10%, any increase in living wage will have a huge impact on their ability to keep services running. Whereas other sectors can absorb the extra costs by elevating their prices, health and social care providers are restricted to set contracts.

“The government must to do more to address industry concerns, as without any additional support, it is very likely that some of our biggest care providers will be put in jeopardy, leading to a crisis in the sector, with too many people needing care and not enough support for them”.

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