The introduction of the National Living Wage (NLW) will push social care services closer to breaking point, council leaders have warned.

Smith Square said the introduction of the NLW on Friday will destabilise the care provider market by adding significant cost to the social care system.

It estimated the NLW could cost town halls an absolute minimum of £330m in 2016/17 to cover increased contract costs to home care and residential care providers.

Council tax rises to increase funding specifically for social care will bring in around £372m in 2016/17, but most of this will go to paying for the NLW, the Local Government Association (LGA) said.

The LGA urged the Government to bring £700m of new funding earmarked for social care through the Better Care Fund forward to this year.

‘Councils fully support proposals to introduce a NLW to help ensure care home staff receive a fair day's pay for a fair day's work,' Cllr Izzi Seccombe, the LGA's community wellbeing spokeswoman said.

‘However, the cost of implementing it will significantly add to the growing pressure on services caring for the elderly and disabled which are already at breaking point.'

Cllr Seccombe argued a lack of funding was already forcing providers to extricate themselves from the publicly-funded care market in order to focus on people who are able to fully fund their own care.

‘We know that care home and domiciliary care providers cannot be squeezed much further,' she said.

‘We will be organising an urgent summit with them to unite our concerns that a care home crisis is creeping closer to reality.'