Introducing the national living wage could result in a “catastrophic collapse” in the number of care homes, according to experts.

And it will lead to higher care home costs in Kirklees.

In a letter to the chancellor, the head of the organisation representing the care industry has warned that the plan will cost the sector £1billion by 2020.

Martin Green, chief executive of Care England, spoke of his fears, saying that staffing accounts for 60% of the cost of care and he said while care companies supported the national living wage, efforts would be needed to rescue the care system.

It comes days before Kirklees Cabinet will consider further rises to weekly care and nursing home fees to account for the increase in national minimum wage. And there’s a warning of further rises next spring.

Councillors will be asked to agree to a series of increases from October – the basic fee for non-dementia residential care will rise by £7.18p to £436.95 per week. The cost for care with dementia will rise by the same amount to £456.95.

Basic nursing home fees for non-dementia care will rise by £6.23 to £454.23 while nursing home fees for dementia care will rise by the same amount to £474.23.

Fees look set to rise once again next April when the new national living wage comes into force, although no costs are given.

Council papers say: “The council has given a commitment to independent sector providers that the impact of increases in the national minimum wage would be reflected in the level of fees paid to them.

“The impact of the new national living wage on council contracts, to be paid from April 2016, will need to be assessed as part of the 2016/17 budget.

“The council itself currently pays above the proposed national living wage and this cost is reflected in our plans. The Local Government Association has already indicated that it expects that Government considers this cost pressure as part of the debate on future council spending.”

The government said social care would be considered as part of the spending review later this year.

Under plans announced in the Budget, workers aged over 25 in the UK will be paid a minimum of £7.20 an hour from April next year, rising to £9 by 2020.

Four Seasons Health Care, Bupa, HC-One, Care UK and Barchester said the measure would cost the care sector £1bn by 2020.