Private residents cover £1.3bn care home shortfall
AN annual £1.3billion funding shortfall in the crisis-hit care home system is being covered by private residents, figures reveal.
The “self-funders”, who already cover their care costs, are paying an extra £104 each week to plug the gap between the amount bosses charge and what councils are willing to pay.
Residential homes in England currently need to charge fees of between £590 and £648 per week in order to generate a “reasonable” annual return on capital of 11 per cent, according to analysts LaingBuisson.
But the costs covered by councils for residential care in the private sector stood at just £534 per week last year. After making cuts to overheads, LaingBuisson estimates the average fee was just £486 per week this year.
William Laing, founder of the group, said: “The entire care home sector for older people is being kept afloat through cross subsidies from the 40 per cent of care home residents who pay privately.
“We have conservatively estimated the shortfall in council paid care home fees at about £1.3billion a year in England alone. The £1.3billion can equally be viewed as a hidden ‘care tax’ that government and councils are content to see private payers contributing to keep mixed funding homes in business.”
He added: “Self-funding residents, mainly middle-class homeowners, are paying to subsidise the councils who pay the bills for residents without savings or assets.”
Anyone who has assets of more than £23,250 in England and Scotland – £23,750 in Wales – must pay their own bills. Councils only start to meet the costs when the value of their property and savings falls below the threshold.
Age UK said 41 per cent of care home residents pay their own bills – compared with 28.5 per cent in 2005. The number has risen from 130,000 to 167,000 over the past decade. George McNamara, of the Alzheimer’s Society, said: “We hear too often about people with dementia having to spend their entire lifesavings and selling treasured family homes to prop up a broken system and cover the Government’s shortfall.”
Plans to introduce a cap on social care costs last year were shelved by the Government until 2020. Town halls can increase their council tax, though critics say it is a paltry sum.
Izzi Seccombe, of the Local Government Association, said: “The gap between what providers say they need and what councils are able to afford is now at breaking point.”