What is really going on in politics? Get our daily email briefing straight to your inbox Sign up Thank you for subscribing We have more newsletters Show me See our privacy notice Invalid Email

One in four children’s homes faces closure as they are forced to cough up millions of pounds in back pay, a shock survey warns today.

Care providers claim the bill will be the “final nail in the coffin” for homes whose income has already been frozen by Tory cuts.

They have begged the government to step in and help pay their staff when a deadline - already twice extended - expires next week.

The row erupted in July after two tribunals ruled carers should earn the minimum wage even while asleep in a client’s home.

HM Revenue and Customs issued retrospective orders for lost wages stretching back six years, landing care firms and charities with an estimated total bill of £160m to £400m.

(Image: PA)

Following an campaign by the care providers the orders were suspended twice, but the latest extension expires on November 2.

Labour, unions and the government all say carers should be given the pay they deserve.

Shadow Communities Secretary Andrew Gwynne said: “Care staff are amongst the lowest paid people in society and they should not have to pay the price for the Tories’ failure to fund social care properly.



“The £2 billion provided by the Government was not enough to plug the £6.3 billion hole cut in social care budgets since 2010 - and it cannot be expected to stretch to cover this additional financial burden."

But the Independent Children’s Homes Association said the situation is still “unsustainable” because most homes are still trying to work out what they owe.

The body, which represents 189 providers with 1,500 independent children’s homes and 5,000 beds in England, said a third of its members replied to a survey and a quarter of those could be “permanently lost” if they are not helped with the bills.

ICHA chief executive Jonathan Stanley said: “Sleep-in back payments... will be the final nail in the coffin for so many who have faced a zero increase in fees from local authorities, the only purchaser and income source, over a number of years.”

He agreed workers should “absolutely” get fair pay, but called for a further delay of three months to a year.

(Image: REX/Shutterstock)

Mr Stanley said care firms and providers are “incredibly worried”, adding: “It’s too terrible to contemplate for some providers. It will have a devastating damage to the country’s children.

“Every children’s home is a special setting so if we lose even one it’s a significant gap.”

He insisted the ICHA’s survey was the best data available and the bill per children’s home provider is thought to range from £40,000 to £2million.

He said: “The government have no idea as to the amount of money, no idea as to the impact on closures. They have to stop and get the evidence.”

But Derek Lewis, chairman of disability charity Mencap, said the decision would have “far wider repercussions”.

He added: “These services would be some of the hardest to replace and once they are gone, they are gone.”

A government source said a further announcement on the row is expected next week.