Robert Kilgour, chairman of Renaissance Care, which operates 12 care homes across Scotland, said the sector could no longer absorb increasing costs due to legislation imposed by both Scottish Government and Westminster legislation, compounded by the needs of an increasingly dependent ageing population.
Mr Kilgour has today announced the company’s Levenhall Care Home in Musselburgh, East Lothian, is to close.
Efforts are being made to find alternative accommodation for the home’s 16 residents.
Mr Kilgour, who was the founder of Four Seasons Healthcare which grew to be the fifth largest business of its kind in the UK, said the “perfect storm” hitting the sector could impact on current and future generations unless immediate action was taken.
He cited extra costs incurred by the Scottish Carers Living Wage, the Apprenticeship Levy, and the shortage of nurses compounded by the UK decision to leave the European Union.
The levy, introduced by Westminster, requires large employers who have pay expenditure of over £3m per year to pay 0.5 per cent of their annual bill to the government for apprenticeship training.
“We’ve seen a huge increase in dependency level in older people over the last five years which means more staffing is required,” said Mr Kilgour.
“But what is being paid by our main customer, local authorities with funding from the Scottish Government, has not kept pace with increasing dependency levels.
“I do like the concept of the Living Wage for our staff. But the Scottish Government introduced it without giving local authorities enough money to pay the independent care home sector.
“However, as about 75 per cent of our residents are local authority funded and between 60 to 65 per cent of our fee income goes on staff costs, it is only fair that our main customer, the Scottish Government, properly funds this progressive move.”
Mr Kilgour added: “We also have a shortage of nurses with a lot less coming over from the European Union post-Brexit and quite a number are going back home.”
Katie Mackie, Scottish Conservative East Lothian councillor for Musselburgh, said: “This decision will be upsetting for residents and their families so I’m pleased to hear Rennaissance Care are working with East Lothian health and social care partnership to ensure suitable accommodation can be found for the residents.”
A Scottish Government spokesman said: “Funding through the National Care Home Contract has increased by 13.2 per cent per week from 2015-16 to 2017-18, allowing independent care providers to invest in staff, quality of service, and to take a reasonable return from the business.”