HUNDREDS of vulnerable elderly people will be forced to move as more care home businesses collapse due to financial pressures, it was claimed yesterday.

Care North-East, the organisation which represents home owners accounting for 15,000 beds, predicts that 20 per cent of homes will close within months if they do not receive extra fees from local authorities.

Care bosses say they cannot afford to pay staff the extra 11 per cent increase in the national minimum wage which comes into effect on October 1.

They say hospitals will be placed under further pressure with elderly patients taking up more vital beds because there are not enough residential places.

The Northern Echo reported yesterday how the number of over 75s waiting for transfers out of hospitals was four times higher in the region than the rest of the country.

More private home closures would also mean that hundreds of jobs would be lost.

Mark McArdle, chairman of Care North-East, said: "The care staff do deserve to be paid more but we can't afford to pay the increased minimum wage. This really is the final nail in the coffin for most home owners.

"I really don't think it is exaggerating to say 20 per cent will not be able to survive much beyond a couple of months."

He said that staff wages accounted for 60 per cent of a care home's costs. But, unlike any other business, they could not increase their costs to cover the problem because they were dictated by the local authorities.

"Private homes in Newcastle and North Tyneside already have a 96 per cent occupancy, so if another couple of homes close it really will be crisis point," said Mr McArdle.

Colin Morris, director of social services at Darlington Borough Council, said local authorities in the region had already made appeals to the Government over the issue.

"What we know is that councils are in difficult financial situations themselves and I think it is highly unlikely that they are going to be able to turn up new resources, particularly in this financial year."