Care home funding shortfalls exposed

News Article

The government recently pledged £940 million to improve mental health services across the country.

In his announcement, the prime minister stated that the increased funding sent a strong message to “let people know that they’re not in this alone, that when the clouds descend, they don’t have to suffer silently”.

Whilst this is unquestionably a positive move and a step in the right direction for mental health services, another group of vulnerable people – those in need of care home services – could argue that they too have been suffering in silence and that their needs continue to be neglected.

Prior to the joint Autumn Statement and Spending Review in 2015, think tank ResPublica published a report exposing a £1.1 billion funding gap in the care home sector.

It claimed a third of this gap was as a result of the government’s unfunded pledge to deliver a national living wage, forcing care home providers to divert funds away from services and into payroll demands.

Providers have complained that councils are unwilling or unable to pay the market rate for the services they require, stopping them from increasing prices.

The Chancellor of the Exchequer sought to help councils by allowing them to increase council tax by 2 per cent, declaring that this measure would help them raise £2 billion, which they would have to use exclusively to fund care costs.

Whilst on the face of it this would appear to be positive news, according to calculations by another think tank, Kings Fund, the increase is only likely to raise £800 million.

Furthermore, the councils that need the greatest level of government support are in the most impoverished areas, which will consequently have the smallest tax bases to tap into.

Care industry commentators are also questioning what the government has done with the £6 billion saved by deferring the implementation of the funding element of the Care Act 2014 until 2020.

Lee McClellan, a partner in Palmers’ Older Client department, who advises on long-term care issues, said: “Even before the increased estimates of the funding shortfalls, it had long been said that the reduced fees paid by the councils towards residents they were funding meant that those who were meeting care fees from their own funds were effectively subsidising council funded residents. These latest reports add to the view that those seeking council funding for their care needs will face greater difficulty in obtaining the same and that private funders will be charged even more by care providers desperate to balance their budgets.

“This underlines the value of seeking expert legal advice both for those seeking to access council funded services and for private funders seeking to avoid paying more care fees than necessary. For more information, please contact our Older Client team.”