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Care home sector ‘kept afloat’ by residents who pay

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Care home residents who pay their own costs are propping up the struggling sector, according to latest figures from healthcare market analysts.

They calculated the average fee per resident paid to care homes falls short of the real costs of service provision by more than £100 a week – suggesting residents who pay from their own finances are filling a funding gap of £1.3bn a year.

“The entire care home sector for older people is being kept afloat through cross subsidies”

William Laing

Residential care homes in England for older people, which employ average levels of staff at average pay rates, currently need to charge fees of between £648 and £590 per week in order to generate a reasonable annual return on capital.

Actual fees being paid by councils, however, compare poorly with these levels. According to LaingBuisson, the costs borne by councils for residential care of older people in independent sector care homes, including council overheads, stood at just £534 per week in 2015-16.

LaingBuisson estimates that average fee paid by English councils for residential care of older people was just £486 per week in 2016-17 – £104 per week below what was needed.

Analyst William Laing said that the adoption of the National Living Wage and requirements to employ more carers to support residents with increasingly complex dependencies has fuelled an “inexorable rise” in care home costs.

He said: “Most councils responsible for supporting publicly funded residents do not have the budgets to pay a reasonable cost for care and… the situation is unlikely to change in 2017-18.”

Mr Laing said care homes continued trading, despite the shortfall, because they received about £8,000 a year on average per privately paying resident.

“The entire care home sector for older people is being kept afloat through cross subsidies from the 40% of residents who pay privately,” he said. “We have conservatively estimated the shortfall in council paid care home fees at about £1.3bn a year in England alone.”

“These findings reflect universal concerns about the escalating social care crisis”

Margaret Wilcox

He added: “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.”

Margaret Willcox, president elect of the Association of Directors of Adult Social Services, said: “These findings reflect universal concerns about the escalating social care crisis, resulting not least in councils struggling to meet rising costs.

“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,” she said.

She added: “Our own survey reveals around two-thirds of councils have had residential and nursing home closures, and more than half have had care providers hand back contracts.”

George McNamara, head of policy and public affairs at Alzheimer’s Society, said “years of drastic cuts” to social care budgets had resulted in residents “being ripped off” by being asked to pay more than the genuine cost of their care.

“With a growing funding gap between the NHS and social care and an ageing population, this problem is set to worsen,” he said. “The government must act now and prioritise delivering a long term plan for social care.”

Izzi Seccombe

Izzi Seccombe

Izzi Seccombe

Izzi Seccombe, chair of the Local Government Association’s community wellbeing board, said: “The gap between what providers say they need and what councils are able to afford is now at breaking point.”

She said the funding gap risked “creating a two-tier system between those able to choose and pay for their own care, and those reliant on increasingly overstretched council-funded care”.

“Councils, care providers, charities and the NHS are all united around the need for central government to fully fund adult social care,” she said. “This is essential if we are to ensure people can live independent, fulfilling lives, as well as alleviating the pressures on the NHS.”

MPs told of workforce challenges in social care sector

Workforce challenges in the social care sector were discussed yesterday at a meeting of the Commons’ communities and local government committee.

Royal College of Nursing employment relations adviser Clare Jacobs, Unison national secretary for local government Heather Wakefield and Skills for Care chief executive Sharon Allen all gave evidence to MPs.

Committee chair Clive Betts, Labour MP for Sheffield South East, asked if the social care workforce was expanding to meet the predicted rise in demand for social care services.

In response, Ms Allen predicted another 275,000 individuals would need to join the workforce by 2025, though adding that technological advances would also have an impact.

Ms Jacobs said that RCN members had reported high levels of unmet need and noted that district nursing had seen staffing reductions over the past few years, which would have a significant impact on nursing in the community.

She highlighted that high vacancy rates for care workers were down to problems with recruitment and retention, as well as “misconceptions about the sector”.

In response to questions from Labour MP Melanie Onn about improving the status of the social care sector, Ms Allen said more positivity was required about the sector and stressed the high-skilled nature of the work, in spite of the lower pay.

There was a need to explain what the social care sector involved, she said, emphasising a further need to dispel some of the myths around the nature of employment.

Ms Wakefield added that better career structure and progression in social care needed to be established, but highlighted that the fragmentation of care tended to suppress this.

The provision of training would make a huge difference, she told MPs, adding that Unison’s findings from homecare workers indicated there was a significant training gap. Having some training framework would help significantly, she said.

Ms Jacobs also stressed the need to articulate the competencies and skills needed in adult social care and ensure that these were reflected through fairer and better pay. There was a clear benefit to rewarding people properly for the work they did, she added.

She said there was a significant training and development gap in the market, as most social care was provided by smaller providers which did not have the resources to develop such opportunities.

Ms Jacobs said that the RCN would be interested in helping address an “information gap” around investment in a training.

But she also argued that social care workers should not be used as substitute nurses and criticised the adult social care sector’s development of associate practitioners.

She claimed they were doing the same job as nurses but presented risks due to their comparative lack of training and lower pay levels.


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Readers' comments (1)

  • NHS senior managers must be subjected to regulation and checks in the same way that other health care workers are. it is not impossible that in some areas where the managers are not educated in cost efficient and humane methods of care (the same thing according to loads of research) that NHS funding is inappropriately and unlawfully being withheld, leaving a disproportionate burden on self funders who are in residential care.

    "In 2015, 30,000 more people died in England and Wales than in 2014, representing the largest year on year increase since the second world war. The most common cause of recorded deaths was dementia." As stated in a report involving the London School of Hygiene and Tropical Medicine, Oxford University and Blackburn with Darwen Council.

    The Department of Health can spout what they like but I helplessly watched what happened and what was omitted when my mother who had dementia was detained in state custody without record of a Relevant Person's Representative before she "ceased to live" in January 2015.

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