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Local care markets facing financial ruin, warn county councils

The County Council Network (CCN) has warned that, despite a delay in the implementation of the Care Act part 2, local care markets will remain on the brink of collapse without government investment. 

The CCN’s chair elect, Cllr Paul Carter, has written to health secretary Jeremy Hunt arguing there is growing evidence that private providers are “locking out” councils to give more residential places to self-funders paying higher fees. 

He said: “Funding reductions in social care budgets have inevitably led to significant downward pressure on the fees paid by our member councils for residential and nursing care. This is leading to unsustainable pressures in local care markets, with many providers teetering on the edge of financial meltdown and collapse. 

“There is also growing evidence of the development of a ‘two-tier’ polarised market, with providers seeking an ever increasing proportion of their business from higher fee paying ‘self-funders’, locking out local authorities from accessing segments of their local market.” 

A joint study from the CCN and analyst LaingBuisson, which PSE reported on in June, provides evidence that the social care system is already “unsustainably reliant” on cross-subsidisation by those people that fund their own care, but also that the Care Act could lead to a significant alteration in the funding model currently keeping many local care markets afloat. 

Through comprehensive analysis of care home fees and the use of dynamic modelling, the research found that the ‘care home fee gap’ in counties already stood at £630m during 2014. 

Cllr Carter added: “Insufficient funding for social care services has led to cross-subsidies growing to unsustainable levels. This is neither sustainable for local markets, nor fair to those that fund and arrange their own care.” 

Professor Martin Green, chief executive of Care England, which represents the industry, said the government must address the funding crisis as a “matter of urgency” or there will be” dire consequences for citizens and the NHS”. 

A spokesman for the Department of Health said: “As part of the upcoming Spending Review, the Department of Health will consider adult social care expenditure and the future demand for services before decisions on future funding are made.”


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