Care Homes in Crisis

Report by Rob Bird, Lib Dem County Councillor for Maidstone Central


The struggles of the NHS regularly hit the headlines but these may soon be supplanted by devastating financial problems threatening the residential care home sector. Recent reports have suggested that the sector is facing ‘meltdown’ or ‘catastrophic collapse’ with the risk of 10% of beds being lost in the next 5 years. This in turn could result in many more elderly residents blocking hospital beds with a potential cost to the NHS of £3 billion (1).

Following the NHS & Community Care Act 1990 local authorities were encouraged to commission residential care from the private sector in order to ‘to facilitate and promote a diverse and high quality market of care and support services’. Care homes were sold off and the private sector readily built new facilities to meet increasing demand. Kent County Council now runs just 8 care homes directly and is currently consulting on the future of 4 of these.

Whilst local authorities paid a fair rate for residential care the commissioning has worked reasonably well. However, the cumulative effects of the Government’s financial austerity programme have put these arrangements under severe strain. KCC and other local authorities have successfully reduced demand for residential care by promoting independent living but, as the elderly population numbers rise, the scope for further reductions may be limited. Now, as public sector budgets are squeezed further and more cutbacks implemented, the care home providers are finding local authority commissioned business increasingly unattractive. The situation is getting worse and the consequences are potentially disastrous.

The Conservative Government’s ‘National Living Wage’ (NLW) which comes into effect next year will escalate the sector’s problems. It falls well short of a true living wage but will mean an increase for large numbers of care home staff currently on the National Minimum Wage. However, the five leading care home operators - Bupa, Barchester, Care UK, HC-One and Four Seasons - plus Care England, which represents the industry, argue that more than half of all of care homes in Britain could struggle, as even a small increase in pay could tip many over the edge. It is estimated that the impact on those homes commissioned by Kent CC could be £12 million or more. Can these care home providers afford to pay the NLW? In many cases, no. Can KCC afford to cover their additional costs? No.

Recently, BUPA put 200 of its 290 care homes up for sale. Four Seasons Health Care, the UK’s largest provider, is now preparing to sell scores of properties and slash its budget. Insolvency experts Company Watch have warned that nearly a third of care home operators are struggling financially with more than 400 firms responsible for 1,500 homes in danger of falling into insolvency. Back in 2011 the private sector was able to step in following the collapse of Southern Cross, the country’s biggest care home group at the time. This is no longer the case; there is no provider of last resort left.

In the past week the Barker Commission on the Future of Social Care in England (2) and the think-tank Respublica (1) have issued significant reports highlighting the current unsustainable situation and potential risks of imminent catastrophe. This was the response from the Local Government Association: "… the social care crisis must no longer be ignored. We are heading towards a devastating care home collapse. It is unacceptable to leave our elderly friends and family living in a care limbo, not knowing where they will live if a care home closes and worrying about the care they rely on… It is imperative that the Government fully addresses this in the Spending Review before we see a care disaster unfold." But is this Government listening?

Last month I asked KCC’s Cabinet Member for Adult Social Care & Public Health for assurance that there will continue to be adequate capacity in the independent sector to meet the care home needs of Kent. The Cabinet Member gave a comprehensive reply setting out the steps being taken to address the situation, including writing to the Chief Secretary of the Treasury regarding the ongoing financing of Adult Social Care in the forthcoming Comprehensive Spending Review. However, he was not able to give the assurance I sought; how could he?

In the short term it may be that Mr Osborne will recognise the additional costs of the NLW in the residential care sector and will enable local authorities to pay a share of these costs. But it will take more than this to address the fundamental unsustainability of current arrangements for residential care.

The Conservative Government has failed to implement the key elements of the Care Act which would have protected self-funders from increasing care costs, important provisions that the Liberal Democrats fought so hard for during the Coalition. Can this Government be relied upon to ensure that there are adequate residential care home places for our future needs? I fear not.

Rob Bird


Respublica - The Care Collapse: The imminent crisis in residential care and its impact on the NHS Authors: Emily Crawford and Claire Read

Commission on the Future of Social Care in England Authors: Dame Kate Barker and others