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Living wage could spark care crisis

By Andrew Grice

Published 01/04/2016

A good and popular policy takes effect today when the £6.70-an-hour national minimum wage becomes a £7.20-an-hour national living wage, as announced in George Osborne's Budget last summer
A good and popular policy takes effect today when the £6.70-an-hour national minimum wage becomes a £7.20-an-hour national living wage, as announced in George Osborne's Budget last summer

A good and popular policy takes effect today when the £6.70-an-hour national minimum wage becomes a £7.20-an-hour national living wage, as announced in George Osborne's Budget last summer. It will give 4.5 million people aged 25 and over on the minimum wage a 10% rise, four times the national average. It is due to rise to £9 an hour by 2020.

The Chancellor can claim there is a big Conservative idea behind the policy: a higher wage, lower welfare society. It will reduce State subsidies for low wages through tax credits (which, despite Osborne's U-turn last November, will still be cut eventually via Universal Credit). Higher wages mean people will spend more, creating a virtuous economic circle.

However, there is a danger that this apparently generous policy could backfire on the Government by exacerbating the problems in our already creaking social care system.

I have already seen with my own eyes the problems the living wage will cause. My mother and my mother-in-law live in a residential home and nursing home respectively. The overstretched staff in both are dedicated, but the service they can provide has declined in recent months in anticipation of higher wage bills. At the same time, my mum's fees were raised by 8% in January, with the private provider blaming the living wage "bombshell".

Both homes are cutting back on staff cover. There is a growing reliance on agency workers, reducing the quality of care for the residents, who sometimes do not see a face they recognise for days.

Jeremy Corbyn was onto something at Prime Minister's Questions this month when he warned we are heading for an era of "agency Britain". The Labour leader cited similar problems in hospitals and schools.

It is a theme that will resonate with millions and could halt the Conservatives' march on to the centre ground if they fail to win people's trust on public services. The blame for a full-scale social care crisis could fall on Osborne.

Private providers are already shifting from delivering publicly-funded care to people who can afford to meet their full costs.

That is ominous - it will mean more old and sick people remaining in hospital because there will be nowhere else for them to go.

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