Care providers face a double whammy of increased costs this month, as CQC have confirmed significant rises in their fees at the same time as the National Living Wage coming into force. While both of those measures will hopefully improve the quality of care in the long term, in the short term they present a real financial burden to providers who are already struggling in a difficult market.

On 30 March CQC confirmed the expected outcome of its consultation on fees for all care providers. In line with Government policy, CQC had previously announced it was to increase its registration fees significantly in order to recover all of its costs and minimise funding from the Department of Health. The consultation, which ran between 2 November 2015 and 15 January 2016, gave the options of either increasing fees to cover costs over two years or four years. Unsurprisingly, the responses were overwhelmingly in favour of the increases being spread over four years, but made clear that this was seen as the lesser of evils.

The new fees table, which came into force on 1 April, confirms that the price increases will be spread over two years for all but community social care providers, leading to dramatic fee rises. For example, the CQC fee for the smallest single location GP service has risen from £616 to £2,187 overnight. The fees for care home providers will still rise, although not to same extent as for NHS services, as the current fees for care home providers are closer to recovering the costs of CQC regulating this sector than those in NHS services. However this may be cold comfort to care providers, who are still facing increases of 10.7% to their fees.

At the same time, the National Living Wage also came into force, with all workers over the age of 25 entitled to £7.20 an hour (a 50p increase on the current minimum wage, although this is expected rise relatively quickly to £9 by 2020). Staff in care homes, especially non-professional staff working directly with service users, tend to be low paid meaning that this increase will affect a large proportion of staff. In addition, CQC regulation of staffing levels means that it is going to be almost impossible to reduce these costs.

The care sector has reported financial struggles for some time, and these increased costs will only worsen the situation. When the living wage was announced last year, the largest care providers published a joint letter warning that it could contribute to the failure of providers within two years. Most would agree that care workers, who provide personal support in difficult situations for low wages, deserve a pay rise, and that the CQC being self-funded could strengthen its independence, but these additional costs come at a particularly difficult time for the care sector. Many in the sector are calling for local government to increase their funding of care home places, while owners will need to think carefully about how they will meet these extra costs while complying with minimum staffing requirements.