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Care home owners are uniting to force local authorities to raise fee levels. It is a desperate move but homes, councils, and residents are running out of options. Ruth Winchester reports.

The idea of joining forces to ensure a particular economic outcome is not new. Since 1960, the cost of crude oil, and hence that of petrol, has been set by a cartel of oil-producing countries, Opec. What is new is the application of that principle to the care of older people.

Faced with dwindling profits from their businesses, owners of independent residential and nursing homes are following Opec's lead and ganging up on local authorities in an attempt to dictate fee levels. Consortia of home owners are demanding increases of up to 40 per cent on the local authority weekly rate, and are refusing to accept local authority-funded residents unless the higher rates are paid. In extreme cases, care providers are threatening to evict frail elderly residents because, they claim, their care is not being paid for in full.

In Stockport, an area whose fee levels are already significantly higher than surrounding authorities, director of social services Jean Daintith recently won a stay of execution after a consortium of owners, representing more than 1,000 beds in the area, threatened to turn away local authority residents unless fees were increased by 9 per cent. A large national provider had also threatened to close down its service within the area, which would have meant the eviction of 70 elderly residents.

And on the Isle of Wight, director of social services Charles Waddicor is facing court action by two care homes that are claiming non-payment of fees. "Some members of the local residential care association have been billing us for a higher rate of care cost than we have said we will pay," he explains. "Now two of them have taken out a civil action against us, which will go to the district court, claiming the higher amount."

To add to the island's problems, a nursing home was also due to close on 11 January, leaving the authority with insufficient beds to meet demand. As a result of the crisis, Waddicor says that vulnerable older people may now have to be placed two or three hours' drive away from relatives and friends.

Despite the difficulties, both Daintith and Waddicor are sympathetic to the independent sector's plight. According to Waddicor: "My starting position is that I agree with them, and I acknowledge that they are in severe difficulties, particularly nursing home owners. It's very hard to see how they can run their businesses at a profit with the fees local authorities have traditionally paid them.

"We are trying to raise the fee levels well above inflation," he says. "It would involve a 5 to 6 per cent increase in council tax alone if we were to set the level of funding at what we think the sector needs to be viable. That's a reflection of the seriousness of the situation -Êunfortunately the government doesn't seem to recognise how serious it is."

The situation across the country looks likely to get worse. Nationally the number of beds continues to decline, yet observers are predicting an abrupt increase in the population of over 85s as the post-world war one baby-boom starts to take effect.

There seems little doubt that providers' costs are increasing beyond inflation, while fee levels barely keep up with it. The introduction of the minimum wage and its subsequent increase have hit many home owners, while the series of pay increases for nurses over the past three years have impacted on nursing homes. The impending new national minimum standards, which take effect in April this year, are also driving many providers to look hard at where their businesses are headed.

But are these care homes really going to carry out their threats? Would any care home owner take the draconian step of evicting frail elderly residents to face an uncertain future?

Nadra Ahmed is a residential home owner, and chairperson of the National Care Homes Association. She describes the threats as an act of desperation. "People have tried being reasonable, now I think they are desperate. No one wants to do this -Êit's against our natures. It's just that we have run out of options.

"We can't provide good quality care on the cheap -Êit's just not possible. At the moment home owners are subsidising local authorities for around £50 per week for plain care. When people have aggravated conditions it's more like £100 per week. We're getting between £200 and £250 in fees, and we need at least £310 per week -Êthat's what we need to provide 24 hour care. It's all meals, laundry, heating, lighting, maintenance. And the staffing increments have gone up by 10 per cent as a result of the minimum wage increase. We're not saying we don't want to pay staff more, but our fee increases are 2 per cent, 3 per cent. That doesn't even cover the increased salary bill."

James Churchill, chief executive of the Association for Residential Care, suggests that providers are unlikely to do anything that threatens the well-being of residents. But he says: "Most of them are good people who will not take this kind of action. But occasionally the worm does turn, and in the past I've advised people to do what they've threatened -Êto take the person back to the local authority at 4pm on a Friday, and to make sure the local press know what they're doing. That usually has the desired effect."

Churchill adds: "I do feel a bit sad when that happens -Êit's deeply offensive to play God with someone's life. But sometimes you either play hardball, or you go out of business, which means a lot more people's lives are disrupted."

Unfortunately, the people who lose out in this tug of war are the residents and their relatives, and the impact can be financial as well as emotional. There is evidence that residents in some homes are having to top-up local authority fee levels out of their own meagre incomes. Far more often, relatives are having to fund the costs that the local authority will not meet, leaving a new group of people facing an impoverished old age.

Sue Adams is acting chief executive of the Relatives and Residents Association. She says: "The whole care crisis has a horrendous effect. People have no choice -Êthey are told there's a bed and they have to take it whether or not it's what they want. And they are being asked to top-up local authority fees by up to £200 per week -Êthat's an extreme case, but many relatives are certainly being asked for £70-£80 per week.

"We are hearing about staffing levels being reduced, the quality of food being cut and the heating turned down. Call bells aren't being answered because of staffing.

"Residential care costs are being grossly underfunded by local authorities, which is driving providers to desperate measures. But it seems pretty drastic to threaten to evict people as a result of a dispute going on between other people.

"I suspect that the Department of Health isn't too unhappy with the plethora of action groups and campaigns being run because it gives them more leverage with the Treasury," she adds. "But ultimately the problem is that there's not enough money going into old people's care. This is quite a youth-oriented government, and old people just aren't sexy."  

- Help the Aged and Counsel and Care are pulling together a broad-based coalition to look at the issue of underfunding of older people's services and the care home crisis. For further information contact 020 7278 1114.