Analysis reveals shortfall in care fees

Prof Martin Green

Residential and nursing care homes for older people had a funding shortfall from local authorities of £2bn during 2021/22, analysis from Care England has revealed.

The representative body said the underfunding did not account for inflation, which peaked at over 11% in 2022 and is projected to surpass 7% for 2023/24, according to Office for National Statistics.

Care England studied average fees paid by local authorities across England and the reported fair cost of care (FCC) rates published last month in their submissions to the Department of Health and Social Care.

Across all councils and just over 178,000 local authority-funded residents, as at April 2022, the average difference between what an authority paid for residential fees and the FCC was £218 per week, while the figure rose to £231 for nursing care.

In the North East, consisting of 12 councils, providing support to over 14,000 local authority care home residents, an authority would be need push up average fees paid in 2021/22 for residential care by over 18% and 24% for nursing to meet the FCC. This would cost over £100m per annum across the dozen authorities.

In the South East, consisting of 19 councils, and supporting over 30,000 local authority-funded care home residents, the average uplift for residential would need to be over 32% and 25% for nursing to address the gap, at a cost of over £400m per annum.

Four local authorities – Dorset, Newcastle upon Tyne, Reading, and St Helens – reported the FCC rate below the average fee they paid to care homes, raising questions on the accuracy of their FCC calculations or average fee data reported, Care England said.

‘The evidence is clear. The care sector is being significantly underfunded by local authorities and requires significant investment by central government. The continued funding shortage needs to be tackled head-on,’ said Professor Martin Green, chief executive of Care England.

The government is injecting £7.5bn into social care over the next two years and this is aimed at creating an additional 200,000 care packages and supporting the early discharge of people from hospital to ease the NHS backlog.

‘Our analysis indicates that the £7.5bn will not scratch the surface in tackling the inherent issue of local authorities underfunding care packages and the rising gap between fees paid and the cost of care caused by inflation,’ said Professor Green.

‘The inability of many local authorities to pay the actual cost of care has resulted in the cross-subsidisation of the state by individuals who self-fund their care. Care staff pay is directly impacted by fees paid for care by local authorities and those who self-fund and, as such, providers who rely more heavily on local authority funded residents are more restricted in their ability to increase rates of pay without being financially constrained, which has a direct correlation to the recruitment and retention issues experienced by the sector.’

Cllr David Fothergill, Local Government Association’s community wellbeing board chair

Cllr David Fothergill, Local Government Association (LGA) community wellbeing board chair, said: ‘These figures confirm what the LGA has been warning of for some time, that the adult social care sector does not have the funding necessary for sustainable care providers to deliver high quality, personalised care and support to people on a consistent basis.

‘This gap only paints one part of the picture of how much social care is struggling, it doesn’t account for under met and unmet need, preventative care and other support measures that help people who draw on care to live an equal life.

‘We have consistently said that £13bn is needed for social care so that its many pressures can be addressed and councils can deliver on all of their statutory duties’