In an open letter to the Chancellor George Osborne, the association highlighted the existing under-funding of homecare, which includes services such as community meals services like ‘meals on wheels’.
It estimated an extra £753 million from councils and the NHS would be needed to implement the National Living Wage.
In a recent Freedom of Information request, the UKHCA revealed that councils paid an average of £13.66 per hour for older people’s homecare.
After accounting for proposed changes to National Insurance Contributions and Corporation Tax, the association estimates that the new National Living Wage will require councils to pay at least £16.70 per hour, including careworkers’ travel time and all other costs.
The UKHCA has suggested a number of solutions to implement the National Living Wage without ‘destabilising an increasingly fragile homecare sector’.
The Government should address the social care wage bill to ensure local authorities are sufficiently resourced; ensure statutory regulators oversee the commissioning practice of local authorities; change the VAT exemption for welfare services to ‘zero-rated’ status; and consider tax incentives for private individuals funding their own, or a member of their family’s, social care.
The letter reads: “Without urgent action from Government and local councils to address the deficit in funding, continued supply of state-funded homecare will become unviable at a time when Government looks to social care services to support an over-stretched NHS, particularly supporting people to leave hospital promptly.
“Market exit by providers would cause considerable distress for people who use homecare services and their families; create a significant burden for local councils who would have to find replacement providers and provide uncertain employment prospects for trained and committed careworkers.
“Resolving this issue now is critical and it will only happen through a commitment to proper funding of care services.”
Colin Angel, UKHCA policy director, said: “Care providers leaving the state-funded market would cause considerable distress for people who use homecare services and their families; create a significant burden for local councils and increase the problem of people being unable to leave hospital promptly.
“We are asking the Chancellor to bring about changes in the funding of homecare to ensure that workers benefit from Government’s policy, while still enabling these vital services to remain economically viable.”