Research confirms long held view that councils do not meet the true cost of care

Topics covered: Ridouts professional advice

Research conducted by LaingBuisson has identified that the cost of providing nursing and social care averages £590-645 per week. This is compared against the estimated amount councils will pay in 2017 (taking into account the 2015-16 figures) which is calculated to  be £486 per week.

Those in the care sector used to handling council-funded residents will not find this news shocking or surprising as they will be aware of the funding gap between what councils’ are prepared to pay and the true cost of care. The cost has been calculated using a model which gives providers an annual 11% return on capital.  The figure of £645 per week is based on a new premises and the £590 per week figure has been attributed to older premises that would only pass regulatory requirements.

When added up it is clear that those that self-fund their places in care homes are plugging the gap. So large is the sector that the shortfall of between £104 and £159 per week equates to £1.3bn annually. This shortfall is passed onto those that fund their own care home places. William Laing, founder of LaingBuisson said the following of the research: –

“Most councils responsible for supporting publicly funded residents do not have the budgets to pay a reasonable cost for care, and despite councils’ freedom to raise further funds from the social care precept [on the council tax], the situation is unlikely to change in 2017-18.

“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. We have conservatively estimated the shortfall in council paid care home fees at about £1.3 billion a year in England alone, being the difference between what councils actually pay in care home fees and what they would pay if Care Cost Benchmark rates were applied to the existing mix of homes.

“The £1.3 billion 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. This ‘care tax’ equates to about £8,000 a year on average per privately paying care home resident.

“In all probability it will take another step upwards in April 2017 as care home owners seek to recover increased costs.”

It is hoped that the Government takes heed of the overwhelming proponents of doom within the care sector and provide the additional funding councils need to pass onto private providers.

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