Costs of social care charging reforms ‘seriously underestimated’

Care homes could face widespread closures and a shortage of beds when adult social care reforms are introduced next year, with the government ‘seriously underestimating’ the costs of its proposals by at least £854 million a year.

The warning, made by the County Councils Network and LaingBuisson, follows analysis of two key aspects of the government’s adult social care reforms: proposals to allow private payers (self-funders) to ask councils to arrange care on their behalf at lower local authority rates and the intention to introduce a new ‘Fair Cost of Care’, which aims to increase care fees paid by councils to make the care market sustainable.

The government has currently allocated £378 million per year for councils to pay this new Fair Cost of Care for care home placements and to protect providers from revenue losses when private fee payers are eligible to ask their local authority to arrange their care – and access lower council rates – from October 2023.

However, council leader and care providers say that the government’s allocation ‘seriously underestimates’ the amount of new funding required and could cause a ‘severe sustainability risk’ to care homes across the country. Widespread care home closures could leave councils struggling to find beds for those who require care and trigger a deterioration in the quality of care between local authority and private placements.

The report calculates that an extra £854 million a year is needed, at the bare minimum, to make the proposals workable by avoiding large-scale closures and to ensure ongoing investment into the social care sector.

Martin Tett, Adult Social Care Spokesperson for the County Councils Network, said: “There is a clear consensus from those that work in adult social care that the government’s Fair Cost for Care proposals are laudable – we all support the principle of making the system fairer. But the government has seriously underestimated the costs of its proposals

“At the present funding level, these proposals could have a serious impact on the care sector across the country, leading to widespread care home closures and a rationing of care for the hundreds of thousands of people who need it each year. Councils will be left between a rock and a hard place – either by raising council tax to excessive levels and cutting local services, or by seeing widespread care home closures in their areas.

“Councils are committed to working with government to develop a roadmap which both implements reform alongside maintaining market stability. However, the government needs to seriously consider the findings from this report and provide a substantial uplift in funding to make the proposals workable.”

The 36 county areas that CCN’s councils represent are the most vulnerable areas in the country, with providers in these areas witnessing a potential 5.6 per cent reduction in their annual revenues. Providers in those county areas account for 86 per cent of all financial losses to the social care sector.