Liverpool City Council is set to increase fees paid to the care sector to help them meet the cost of the new National Living Wage.

The new rate of £7.20 per hour for over 25s and £6.70 for 21-24 year olds is being introduced in April 2016 and represents an increase of about 10.8 percent on the current National Minimum Wage.

Detailed analysis of the age profile of the workforce in residential and nursing homes and home care agencies has been carried out to estimate the financial impact on the sector.

A report to the Cabinet today is proposing increasing the hourly rate for home care by £1.09 to £12.97.  The weekly rates paid for residential and nursing care will rise by between £17.53 and £24.53 per week.

The total cost of the increase to the city council will be £3.7 million over the next financial year.

Councillor Roz Gladden, Cabinet member for adult social care, said:

“It’s really important that we increase our rates to make sure that the care sector in Liverpool is not adversely affected by the introduction of the new National Living Wage. Their staff do an amazing job and we would love to be able to pay higher rates but, as everyone knows, we have very limited financial resources in the context of a 58 percent cut in our budget since 2010. Although the wage rise is to be welcomed, it increases pressure on our budget and more than wipes out the additional £2.8 million the Government has allowed us to raise for adult social care by increasing council tax by two percent. It demonstrates the huge challenges we face in dealing with a growing older population at a time when council funds are being cut dramatically by Whitehall.”

Consultation will now start with care providers in Liverpool over the proposed new rates, with the aim of introducing them from May 2016, backdated to the start of the financial year.