Latest Public Sector News

25.01.17

Care home crisis leaves self-funders footing £1.3bn bill

Self-funding care home residents are paying a “care tax” to keep the system afloat due to a £1.3bn shortfall in adult social care funding, analysts have revealed.

The healthcare market intelligence provider LaingBuisson has found that residential care homes are currently charging fees of between £590 and £648 per week, despite English councils contributing only £486 per week towards residential care in 2016-17.

The analysts have warned that this “tax” equates to around £8,000 a year per self-funding resident and will only increase from April as care home owners look to pursue a rise in costs.

“The entire care home sector for older people is being kept afloat through cross subsidies from the 40% of care home residents who pay privately,” said William Laing, founder of LaingBuisson.

“The £1.3bn can equally be viewed as a hidden ‘care tax’ that government and councils are content to see private payers contributing to keep mixed funding homes in business.”

The findings have been met with concern by local authorities and social care directors alike as the Association of Directors of Adult Social Services (ADASS) said that reductions in council funding and the rising minimum wage are making it harder for providers to recruit staff.

In a survey held by ADASS, around two-thirds of councils have seen residential and nursing home closures in the last year despite 82% of councils increasing the fees they pay to residential care home providers. More than half of councils experienced care providers rejecting contracts.

“These findings reflect universal concerns about the escalating social care crisis, resulting not least in councils struggling to meet rising costs,” said Margaret Willcox, president elect of ADASS.

“Councils are doing all they can to protect adult social care but reductions in funding and the cost of the National Living Wage, while welcome, means many providers are finding it hard to recruit staff, especially in home care in those areas of high employment.”

The LGA warned that social care faces a funding gap of £2.6bn by 2020, double the current shortfall due to aging population and inflation. It called for “urgent and genuinely” new funding from government to quell the crisis before more providers leave the publicly funded care market or go out of business.

“The historic underfunding of adult social care is impacting on the cost and quality of care and access to it,” said Cllr Izzi Seccombe, chairman of the LGA’s Community Wellbeing Board.

“The consequences for the provider market are particularly acute and the gap between what providers say they need and what councils are able to afford is now at breaking point.”

Cllr Seccombe repeated the LGA’s warning that the shortfall risks the creation of a two-tiered system between those rich enough to choose and pay for their own care and those reliant on “increasingly overstretched” council-funded care which will not sufficiently meet their needs.

Last winter the government announced that it would allow councils to access a new adult social care grant and raise the council tax precept to 3% in an attempt to bolster adult social care, but councils warned that the measures will not be enough to stem the growing crisis.

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