The below Parliamentary question was asked by Julian Knight on 2016-06-24.
To ask the Secretary of State for Health, whether he plans to take steps to ensure that the costs of social care do not rise as a result of the introduction of the national living wage.
Alistair Burt
The introduction of the National Living Wage is part of Government’s wider approach to move from a low wage, high tax, high welfare society to a higher wage, lower tax, lower welfare society. The national living wage is an important step in rewarding the valuable contribution made by care workers, who often fall into the lowest earning occupations. It is expected that any increase in costs in the care sector associated with the National Living Wage will be partly met by higher productivity, efficiencies and will also help deliver better-quality care through improvements in staff retention and commitment.
Local authorities are responsible for ensuring the availability of high quality social care in their areas and the commissioning of local services for those people who are entitled to public funding. They are locally accountable for how their budgets are allocated and spent. The terms and conditions of contracts negotiated between local authorities acting as commissioners of services and providers on an open market are a local matter that should reflect local conditions.
However, under the Care Act, local authorities must have regard to fostering an effective workforce with the appropriate capabilities when shaping their local markets. The Act and its statutory guidance are absolutely clear that prices and fee rates agreed with providers must reflect these new duties, including the National Living Wage. The Department has also worked with the Association of Directors of Adult Social Services, the Local Government Association and care providers to co-produce a set of commissioning standards to support local authorities to assess and improve their commissioning practices. These standards are based on best practice and amplify the requirements set out in statutory guidance.
As part of the Autumn Spending Review the Government is giving local authorities access to £3.5 billion of new support for social care by 2019/20. Councils will be able to introduce a new Social Care Precept, allowing them to increase council tax by 2% above the existing threshold. This could raise up to £2 billion a year for social care by 2019/20. From April 2017, the Spending Review makes available social care funds for local government, rising to £1.5 billion by 2019/20, to be included in the Better Care Fund. Taken together, the new precept and additional Better Care Fund contribution mean local government has access to the funding it needs to increase social care spending in real terms by the end of the Parliament and meet costs from the introduction of the National Living Wage.