Care services for the elderly and disabled could hit breaking point with the introduction of the new National Living Wage (NLW), councils say.
Town councils, who have battled against a £5 billion social care funding gap since 2010, fear the new measure which starts on April 1 could heap significant costs on to the already-stressed system.
The Local Government Association (LGA) estimates that councils could pay out at least £330 million in 2016/17 to cover increased contract costs to home care and residential care providers but warn the true cost is likely to be much higher.
Despite supporting the NLW, which will ensure care home staff get a fair day's pay for a fair day's work, the LGA's Izzi Seccombe said: "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."
LGA figures suggest that council tax rises aimed at increasing social care funding will bring in around £372 million in 2016/17.
Some councils may find that all of this extra money is swallowed up to cover the cost of the NLW, the LGA warns.
Others may find it is not enough to cover increased care provider costs in an age when people are living longer with more complex health conditions or to protect services from any further cutbacks, the LGA claims.
The LGA is calling for the Government to bring the £700 million of new funding earmarked for social care through the Better Care Fund by the end of the decade forward to this year.
Ms Seccombe believes that extra council tax income to pay for social care in 2016/17 will not bring in enough money to plug growing funding gaps and there is "a real risk that councils will struggle to cover" the increased contract costs.
She said: "A lack of funding is already leading to providers pulling out of the publicly-funded care market and shifting their attention towards people who are able to fully fund their own care. We know that care home and domiciliary care providers cannot be squeezed much further."
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