The average fees paid by local authorities for residential care homes do not even cover the costs of meeting the legally required “essential standards”, according to a report.
Produced by the care home provider, Bupa, with the healthcare analysts, Laing and Buisson, the report claims that there has been a real terms reduction of nearly four per cent over the past two years. And, they said, that downward trend is predicted to continue.
Now they are calling on central government to require local authorities to raise their fees between five and eight per cent over the next three financial years.
The care home industry has been hit hard in recent years with the reduction in social care funding. Earlier this year Southern Cross collapsed and only last week one of Scotland’s largest care home companies, Argus Care Group, went into administration.
A separate report out today by accountants Wilkins Kennedy shows that 73 care companies went into adminsitration in the past year compared with 35 the year before. They blamed the squeeze on spending, along with rising debts and high rents.
The Bupa report found that the baseline fees paid by local authorities rose by an average of 0.7 per cent in 2010/11 compared with the estimated care home cost increases of 2.1 per cent.
Last week a judge ruled that Sefton council in Merseyside acted illegally when it arbitrarily froze its payments to residential care homes two years ago. As a result, it is thought that 120 authorities, representing 80 per cent of councils in England, could be forced to review their budgets.
But all this comes at a time of a growing crisis in long term care for the elderly.
That has effectively been rejected by the government although Andrew Lansley has said he wants to hold cross-party talks on future funding options before publishing a white paper next spring.
Care home providers, however, say the funding crisis has to be dealt with now or more homes will go bust and there will be fewer places for the elderly.
The Local Government Association said that the report highlights the system is broken, that there is not enough funding. A spokesman said that the government could not afford to delay finding a solution to the problems facing adult services.