Social care is in crisis - again

16 August 2017

We’ve all seen alarming headlines like ‘Social care is in crisis’ or that care for the elderly is ‘close to collapse’ as council funding starts to run out.

The care home sector is definitely struggling. In fact, many have gone out of business over the last few years. Perhaps the largest of these was the Southern Cross Group in 2011. Since then, 75 more care home operators have also gone out of business, and it’s estimated that a further 25% are at risk.

So why are they in so much trouble when care home fees are so high? Precisely for this reason. Many of their problems relate to a shortage of money. Often there is a big difference between what a local authority will cover for someone’s care and how much the care home needs to run efficiently and profitably. The average difference is about £213 per week per resident and in some cases this gap will be a lot larger. With more people relying on their local authority for funding, the less profitable their business becomes. 

In order to survive, the care homes need more self-funding residents. But it’s estimated that a quarter of people who self-fund their care will run out of money eventually. This will leave them in a position where they will need to rely on the local authority to fund the rest of their care. And as we know, there’s a funding shortfall. The private care homes can’t afford to run their services using the local authority funding offered.

In extreme cases, some care home providers have even handed back contracts to the local authority. They have decided that they were unable to make ends meet on the money that councils were able to pay them.

The social care funding crisis is a problem that just won’t go away. The most recent budget included an announcement of £2 billion towards social care. This was welcomed. But will it be enough? While it’s a large amount of money, it’s unlikely to solve the social funding crisis - the funding gap is currently predicted to be around £2.6 billion. The reality is that more people will be expected to fund their care themselves. The challenge, of course, is understanding how best to prepare for this.