Scottish Care has warned the failure of talks to agree new care home fees could lead to a “huge” number of care home closures.

The stark warning came after the representative body and local government body COSLA failed to agree new fee and pay levels for the National Care Home Contract (NCHC).

Scottish Care has rejected a 6% increase in NCHC rates arguing this will not pay care workers the £12 minimum pay rate they deserve and address critical energy and other cost issues.

At the moment the NCHC rates for residential and 24/7 nursing care are £838 for a nursing home and £719 for a residential care home. This is equivalent to less than £5 per hour for complex care and support.

Care home providers are facing huge recruitment challenges with staff being paid 19% less than equivalent workers in the NHS as well as energy cost rises of over 500%.

Scottish Care warned: “The loss of the NCHC will result in the closure of many more care homes across the country most especially in rural and remote communities and even more importantly will cause huge damage and distress to hundreds of care home residents.”

Councillor Paul Kelly, COSLA’s health and social care spokesperson, said:  “Following an intensive period of negotiation, in March of this year local government made an offer to the care home sector. This was the highest ever proposed increase to the National Care Home Contract, is the best offer we can make and is at the limits of affordability. We note that Scottish Care have acknowledged this.

“Local government budgets have been under severe pressure in recent years. Despite this the offer sought to recognise the essential and invaluable role of care homes and their staff within our communities and was inevitably shaped by the severe financial and inflationary pressures we collectively face.

“We understand that as part of Scottish Care’s rejection of this offer there was direct engagement with Scottish government in relation to the financial challenges across the sector.

“Meanwhile, councils have continued to ensure payments are timeously made to care home providers, including to enable adult social care workers to receive the Real Living Wage. The full offer remains on the table.”

Speaking to Caring Times, Robert Kilgour, founder and executive chairman of Renaissance Care, accused Scottish local government of a “two-faced” approach to private care homes.

Kilgour told us local authorities paid 50% more for the cost of their own care homes than they did to private providers, adding the current NCHC rate was around a third below the true cost of care.

He warned the current “trickle” of care home closures would turn into a “tsunami” without a better deal.

The care leader called for a higher increase in the NCHC rate along with a one-off hardship payment to care homes along with a commitment to work towards the true cost of care.

Around 70% of residents at Renaissance Care’s 17 care homes are funded by local authorities and Kilgour warned these homes would have to be reviewed on a case by case basis if the NCHC talks failed.