Care home providers urged the Welsh Government to follow through on a key commitment to ensure care workers are paid the real living wage.
Giving evidence in the Senedd, Care Forum Wales, which represents more than 450 care homes, warned funding did not reach all parts of the sector in 2024/25.
The non-profit organisation said funding for the real living wage (RLW) was not ringfenced, so some councils chose to spend the money on libraries and teachers’ salaries instead.
Care Forum Wales raised concerns about “nobody taking responsibility”, with the Welsh Government claiming to have provided the money and councils saying it was insufficient.
Labour’s manifesto for the 2021 election contained a pledge to “ensure care workers are paid the real living wage during the next Senedd term”.
‘Drop in the ocean’
But Sanjiv Joshi, Care Forum Wales’ treasurer, warned the Welsh Government’s push for care workers to receive the real living wage has become an aspiration rather than a reality.
He told the local government committee: “The first year when it was announced … providers had to give an undertaking to commissioners that we were paying the real living wage.
“Since then, that’s now become aspirational as commissioners have not had the funds – or so we are told – to follow through and maintain those real living wages.”
Giving evidence on April 3, Melanie Minty, policy adviser at Care Forum Wales, said: “The real living wage, as Sanjiv said, isn’t reaching the sector necessarily.”
But, describing the RLW as a drop in the ocean, she warned care homes cannot compete with councils and the NHS which pay a higher rate than used in costing commissioned care.
‘Drastically cut back’
Under the Welsh Government’s 2025/26 budget, funding for the real living wage is allocated to councils within the revenue support grant, meaning it can be spent on other areas.
Ms Minty also voiced concerns about an increasing number of councils receiving grants to build care homes that “will never recover their costs”.
She pointed to the example of Carmarthenshire Council building a £19.5m residential home despite free capacity in the county’s independent sector.
Cautioning that commissioning too often focuses on cost over outcomes, she said: “I’ve heard of commissioners going into homes and saying ‘you’re spending too much on food’.
“Things like holidays have been drastically cut back for younger people.”
‘Imagine the pressure’
Mr Joshi, who runs the Caron group of care homes in mid and south Wales, warned of a £9,000-a-year difference in nursing fees between neighbouring councils.
He said: “We’re talking about Cardiff and RCT … imagine the pressure that puts on and it’s not driven by the needs, the needs would not be that different.”
Pressed about the minimum level of profits required to make services feasible, Mr Joshi replied that he targets an 11% return which is unachievable in parts of Wales.
Warning of an “irrational” policy direction, he said: “We have the private sector delivering incredible value for money [yet] being eroded by underfunding. Then we have the public sector spending four or five times that amount, it doesn’t make sense.”
Mr Joshi told the committee families are increasingly having to make up a difference in costs that should be provided by councils and health boards.
‘Not viable’
Warning charity providers are exiting the market, Ms Minty said: “Most of our third-sector members have sold their care homes because they are not viable.”
Ms Minty called for a fee methodology that can be applied consistently across Wales, with some councils far more transparent and understanding of the costs than others.
“Cardiff, while giving a really good increase this year, has been very honest in admitting they know it’s not going to meet all the changes,” she said. “Whereas other local authorities … have been known to make an offer and say this will cover all sorts of things.”
She said the sector has stabilised since the pandemic and Brexit but increasing employer national insurance contributions have added to the pressure.
She told the committee: “I think we’ll see an unintended consequence will be that employers are forced to suppress pay increases … and some will be forced to make redundancies.”