Living wage requirements will increase council care contract costs by £1 billion by 2020

Paul Snell is managing editor at Supply Management
14 July 2015

The introduction of a living wage by 2020 will cost local authorities in England an extra £1 billion, the Local Government Association has warned.

The organisation that represents councils said an additional £330 million would be needed in 2016 to cover extra contract costs to home and residential care providers to pay council care staff. This will rise by £170 million a year, reaching more than £1 billion by 2020.

Announced by the UK government last week, the national living wage will be introduced to those over the age of 25 at £7.20 from April 2016, rising to £9 per hour by 2020-21.

Gary Porter, chairman of the LGA, said: “It is vital that these costs are considered by the government in the wider debate of council funding.

“If government were to fully fund the cost of introducing the National Living Wage to council staff and care workers, councils could avoid extra financial pressure being placed on them as they continue to protect services, such as caring for the elderly, collecting bins and filling potholes.”

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