Re­vealed: the true cost of care (for those who pay)

The ex­tra costs borne by those who pay their own care home fees are much higher than pre­vi­ously thought, says Olivia Rudgard

The Daily Telegraph - Your Money - - FRONT PAGE -

Mid­dle­class fam­i­lies who have to pay for their own care are not merely sub­si­dis­ing coun­cil-funded res­i­dents but be­com­ing the sole source of care homes’ prof­its. This means that pre­vi­ous cal­cu­la­tions of the “self-fun­der tax” – the dif­fer­ence be­tween fees paid by pri­vate res­i­dents and fees paid by coun­cils – have been hugely un­der­es­ti­mated.

The dis­clo­sure, based on re­search un­der­taken for Tele­graph Money, comes as Bri­tain’s care cri­sis moves back up the po­lit­i­cal agenda, with more homes fac­ing clo­sure and more choos­ing to turn away coun­cil-funded res­i­dents in favour of self-fun­ders.

Fig­ures cal­cu­lated for this news­pa­per by Valu­ing Care, a con­sul­tancy, show that self-fun­ders now spend £713 a week on aver­age on a res­i­den­tial care home. This has risen from £674 in 2013.

Nurs­ing homes, which pro­vide a higher level of care, have in­creased their fees by even more. A stan­dard nurs­ing home cost £798 in that year. It now costs £874, a rise of al­most 10pc in three years.

But one fac­tor be­hind that in­crease is a move by care homes to ex­tract more profit from self-fun­ders.

Last month Laing Buis­son, the most au­thor­i­ta­tive an­a­lyst of the care sec­tor, sug­gested that coun­cils paid care homes £104 per week less, on aver­age, than the real cost of each place. This fig­ure, how­ever, built in an el­e­ment of profit mar­gin for the care home. By Laing Buis­son’s cal­cu­la­tions this leaves self-fun­ders mak­ing good a £1.3bn short­fall each year.

Valu­ing Care ar­gues that the over­all fig­ure is likely to be far larger.

Ray Hart, a di­rec­tor, said: “Ev­ery­one points to coun­cils’ un­der­fund­ing of care home places, but the re­al­ity is dif­fer­ent. The profit mo­tive of th­ese busi­nesses is work­ing its way into the sys­tem as well.”

Laing Buis­son’s fig­ures are based on care homes tak­ing an 11pc profit mar­gin from the busi­ness. This 11pc ap­plies who­ever pays.

But Mr Hart said that the low fees paid by coun­cil-funded res­i­dents, in real life, al­lowed care homes to take only a 7pc profit mar­gin. If care homes were to achieve their 11pc tar­get, self­fun­ders would have to cough up the dif­fer­ence. There is also a sus­pi­cion, said Mr Hart, that where care homes think they can get away with it, they will in­crease the dif­fer­en­tial even fur­ther.

For ex­am­ple, Valu­ing Care es­ti­mated that the weekly cost of pro­vid­ing care in Sur­rey in 2014-15 was £558. The coun­cil paid £326, leav­ing a short­fall of £232. The amount that would have been charged to self-fun­ders to cover the short­fall was there­fore £790.

If – in the way Laing Buis­son sur­veys the in­dus­try – it was sim­ply the case that self-fun­ders paid the dif­fer­ence, their fee should ap­prox­i­mate to that fig­ure, ar­gues Mr Hart. But the real fee charged was £960, a sig­nif­i­cant £170 above the amount that would have made up for the coun­cil short­fall.

While the ma­jor­ity of care homes in the sec­tor are small, in­de­pen­dent busi­nesses, around 20pc of beds are pro­vided by care home chains.

Th­ese are share­holder-owned busi­nesses where, in some cases, high lev­els of debt are pres­sur­ing the di­rec­tors to raise rev­enues.

A 2016 re­port by the Cen­tre for Re­search on So­cio- Cul­tural Change at Manchester Univer­sity claimed that larger care com­pa­nies’ need for a sig­nif­i­cant profit mar­gin was in­flat­ing prices.

The re­port said: “The big chains

now tell a trade nar­ra­tive via the me­dia about an ur­gent cri­sis in so­cial care which is the re­sult of not enough money from lo­cal au­thor­i­ties. This nar­ra­tive over­sim­pli­fies the story: the is­sue is not sim­ply how much money goes into adult care but where the money goes.”

Some care homes do not house any coun­cil-funded res­i­dents at all, be­cause the fees are sim­ply too high.

Any­one with as­sets worth more than £23,250, in some cases in­clud­ing their home, must pay for their care them­selves, un­less they qual­ify for NHS fund­ing.

A promised care fees cap, which would limit the amount that an in­di­vid­ual spends on fees in their life­time to £72,000, was orig­i­nally meant to come into force in April 2016 but will not now take ef­fect un­til 2020.

Prof Karel Williams, who co-au­thored the Manchester Univer­sity re­port, said some care home com­pa­nies were mov­ing from coun­cil-funded res­i­dents to self-fun­ders – putting a fur­ther squeeze on avail­able places.

He added that chains were build­ing the vast ma­jor­ity of new care homes, mean­ing that the same prob­lems were likely to con­tinue or worsen as more of the sec­tor was taken up by larger com­pa­nies.

“Chains are the only ones build­ing, and only in one for­mat – the ‘ Trav­elodge-style ar­range­ment’ with 60 beds – be­cause that’s more prof­itable,” he said.

“Small com­pa­nies are sell­ing up be­cause their build­ings can be turned into flats.”

The Gov­ern­ment’s pro­posed so­lu­tion is to al­low coun­cils to charge ex­tra coun­cil tax to help fund care home places.

On Tues­day Sur­rey Coun­cil, which had threat­ened to hold a ref­er­en­dum over im­pos­ing a 15pc rise, backed down and said it would in­tro­duce only a 5pc rise.

An­other so­lu­tion, sug­gested by Dr Sarah Wol­las­ton MP on Thurs­day, would be to in­crease Na­tional In­sur­ance.

But Prof Williams said more money alone would not solve the un­der­ly­ing prob­lems.

“There needs to be more thought about busi­ness mod­els rather than say­ing we need to put more money in,” he said.

Sarah Wol­las­ton MP: ‘raise NI’

Newspapers in English

Newspapers from UK

© PressReader. All rights reserved.