A spreadsheet landed in my inbox the morning after the Budget, with one column highlighted in yellow.
It came from the owner of a small care group, and the yellow column was headed "gap to floor". She had worked out what the new pay minimum does to every job above it. And she wanted to know whether she was imagining the problem.
She wasn't.
Two of her team leaders were about to sit within pennies of the people they supervise. A third was closer than that, and she had no budget line for any of it.
What did the Budget change for care employers?
On the 28th October the Chancellor confirmed that the National Living Wage for workers aged 21 and over rises to £13.21 an hour, an increase of 3.9%, according to Personnel Today's coverage of the CIPD's Budget response. Small Cap News gives the current rate as £12.71 and reports that the new rate starts on 1st April. The 18 to 20 rate moves by the same percentage to £11.27.
But the headline figure hides most of the story.
Fifty pence. It sounds like nothing.
Small Cap News puts the extra cost at £1,046.50 a year for each full-time worker on a 35-hour week. That is £910 in pay, a figure it attributes to the Treasury, plus £136.50 in employer National Insurance. Multiply it by your rota and you have the number every finance director in the sector is staring at right now.
And the sum gets bigger once you count the roles above the floor.
Why does a 50p rise reach managers who earn well above the minimum?
Because pay differentials live in people's heads, and a rising floor drags them along. When the bottom of a pay structure goes up and the rungs above stay put, the distance between rungs shrinks, and the people on those higher rungs notice first. A senior carer who is only 40p better off than the colleague they supervise will start asking what the extra responsibility is worth.
Take a made-up example, because the arithmetic is easier to see than to describe. A team leader on £13.61 an hour sits 90p above the floor today. In April the floor reaches £13.21 and that gap becomes 40p, which is barely worth getting out of bed for on a night shift.
Now repeat it for the unit manager and the deputy.
Which care roles feel the squeeze first?
The ones just above the floor, and they are rarely the roles providers lose sleep over. Everyone watches the care assistant rate because the law sets it. Far fewer people watch the senior carer and team leader band, where a 50p rise can wipe out most of a differential in one go.
Yet those are the people who run the shifts, and they are usually the ones a deputy manager is grown from.
And then it travels upward. If team leaders get a rise to restore their gap, the deputy manager's gap starts to look thin, and the registered manager notices that the person two rungs below is catching up. I wrote about an early version of this when a care worker pay rise first threatened to squeeze managers, but the Budget turns a future risk into a date on the calendar.
In my experience, searching for registered manager salary UK figures gets you a spread so wide it's close to useless, because similar services pay their managers very differently. I'd argue that spread is exactly what makes a squeeze dangerous, because nobody is sure what the right number is, so nobody notices it has drifted. And a drift like that never fixes itself.
I'm not claiming every provider will lose managers over this.
But the ones who do will tend to lose them quietly, in the weeks after the first payslips at the new rate, and the first sign will be a CV rather than a complaint.
What can a provider do before April?
Start with a map. List every role from care assistant to registered manager, write down what each is paid today, and work out the gap to the new floor for each one. It takes an afternoon. It's the same exercise the owner behind that yellow column had already done.
Then decide, role by role, whether you restore the gap, narrow it on purpose, or leave it and accept the risk. Any of the three can be right.
Drifting into one of them by accident is the only wrong answer.
It also pays to look at what the market is doing above you. The CIPD's chief executive said after the Budget that too much is being done to employers rather than with them, and he flagged zero-hours reforms among his worries. Your competitors face exactly the same pressure, and some of them will respond by offering your deputy a bump. Or your best team leader.
The government also paused plans to equalise the youth rate with the adult rate, which Personnel Today reports the CIPD welcomed as relief for employers. That helps anyone who employs younger carers and does nothing for your senior ones.
How long does it take to replace a manager who leaves over pay?
Longer than most budgets allow for. A registered manager has to be recruited, interviewed, registered with the regulator and settled into the service, and the home or branch carries interim cover throughout. The cost of that gap, in agency cover, lost momentum and inspection exposure, usually dwarfs what it would have cost to keep the differential intact.
That's a judgement from the placements we see rather than a published figure, so weigh it accordingly.
But I haven't yet met a provider who regretted paying a manager fairly.
The yellow column is still open on my screen as I write this. She asked whether she should move the team leaders now or wait for April, and I told her what I'd tell you. Move them on purpose, in the open, before anyone has to ask.
If you're mapping your own pay structure ahead of April and want to see how senior care roles are being paid elsewhere, talk to our health and social care recruitment team.
