Authoritative Organisations Warn PM of Care Home Crisis

The most authoritative voices in the care home sector have been warning Prime Minister Theresa May that the industry is in a crisis state.

Chairs of three influential Commons committees have urged the Prime Minister to tackle the immense challenge of funding health and social care in the coming years.

It is generally considered that this will become particularly problematical, owing to the fact that demographic shifts in Britain will result in a greying population.

“We are calling for a new political consensus to take this forward,” Conservative MP Sarah Wollaston of the health committee, Labour’s Meg Hillier of the public accounts committee and Clive Betts, another Labour MP, of the communities and local government committee wrote in a letter to May.

Financial difficulties in the care sector are underlined by the fact that nearly 400 care home businesses have failed financially since 2010.

And the number of failures each year has risen sharply since 2010.

Many homes are particularly struggling owing to a reduction in the amount that councils pay towards fees for care home residents.

“Some local authorities are paying less than £2 an hour towards the cost of caring for a resident,” noted one senior executive at a leading care home operator.

Meanwhile, the overheads of care homes have increased significantly owing to the introduction of the national living wage.

This means that workers aged 25 or over must be paid at least £7.20 an hour from April 2016.

Major care homes are also struggling in the contemporary climate, with Four Seasons, the biggest care home operator in the country with more than 400 properties, clearly under pressure.

Four Seasons recorded a pre-tax loss of £28 million in the three months to the end of September 2016.

Aside from its financial deficit, the company also has in excess of £500 million worth of debt to deal with, ensuring that it pays around £30 million interest every three months.

Although the company insists that it is able to manage its debt and stabilise its financial position, there is no doubt that the figures are worrying for the operator.

Robbie Barr, the chairman of Four Seasons, has warned about the powerless state that many care homes find themselves in, and called on councils to intervene.

“It is essential that councils use the powers they have been given to raise the social care precept and pass it on to frontline elderly social care services to help offset the additional costs of the national living wage increase and avoid further pressures on a sector that is struggling at tipping point.”

Meanwhile, Izzi Seccombe, chair of the community wellbeing board for the LGA, warned of the seriousness of the existing situation in social care.

“The care provider market cannot carry on as it is and there is a real danger of more widespread market failure.”


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