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How the national living wage could come at a cost to businesses in the East of England

Video report by ITV News Anglia's Malcolm Robertson

The national minimum living will be introduced on Friday - meaning employees over the age of 25 will be paid a minimum of £7.20 an hour - but it could come at a cost.

In the the East of England, which has a large elderly population and a big agricultural industry, the impact could be significant.

The impact of the national living wage could be significant in the East. Credit: ITV Anglia

The move will mean an extra 50p an hour for Britain's lowest paid. It's been welcomed by those such as a Maylin Clarke, who’s worked as a carer at a Norfolk residential home in Hunstanton for 10 years.

Well, that is a good start. It should have happened years ago but that is a welcome raise anyway...

– Marylin Clarke, Carer
The national living wage will mean an extra 50p a day for the lowest paid workers. Credit: ITV Anglia

In some parts of the region, up to a third of workers could feel the benefits. However, there are fears about possible job losses, and that some care homes might have to close as they struggle to balance the books.

Rag Seghal is general manager of Armscare, which operates five care homes. They have a mix of residents: some private, some paid for by the local authority.

With council funding still uncertain, he’s concerned some homes might be put in difficulty.

If they meet the employee costs, then somewhere they'll have to cut back and that ultimately affects their occupancy levels.

If they can't reinvest back into providing a nice environment for instance, then they will have less clients coming in. Then there's a downward spiral, and ultimately like any business not just about the care we provide.

It’s about balancing the books at the end of the day. If you can't do that, care homes - the smaller operators - will go out of business.

– Raj Seghal, Managing Director of ArmsCare
There are concerns that care homes could struggle to balance the books. Credit: ITV Anglia

The Government says its policy is to ensure that work pays. It's making up £3.5 billion available to councils to meet social care costs and lowering corporation tax to 17%.

The Government wants to move to a higher wage, lower tax, lower welfare society. Now is the right time to ensure low wage workers can take a greater share of the gains from growth.

Britain deserves a pay rise and our new National Living Wage will give a direct boost to over a million people. We are building a more productive Britain and giving families the security of well-paid work.

– Government spokesperson
The Government says its policy is to ensure that work pays. Credit: ITV Anglia

The government is also reducing council tax by 2%, but the Local Government Association says this won't cover all the costs.

This year alone, it estimates that councils will have to spend a minimum of £300 million for increased home and residential care.