Deloitte warns of recession threat to care providers

The recession could lead to significant increases in social care charges and possibly drive providers out of the market, an expert has warned.

John Baker, head of consultancy Deloitte’s social care team, said a lot of its current work with local authority clients involved examining how they could boost income from charges, to tackle increased demand for services arising from the downturn.

Baker, formerly director of social services at Plymouth Council, said adults using services “may be facing significantly higher charges over the next year”.

Providers under pressure

He also said that some providers were coming under pressure because they had “borrowed quite heavily over the past few years” and were now struggling to refinance loans because of credit’s lack of availability.

Baker, who said Deloitte has worked with about 40 councils in the past year, said councils needed to do some “quick work” over the next six months to shore up providers.

Social care charges have followed an upward trend in recent years. A Counsel and Care survey of councils last year found average home care charges had risen from £11.07 to £12.84 an hour, while Leonard Cheshire Disability has warned that charges could be deterring disabled people from accessing care.

LDC’s public policy manager, Guy Parckar, urged councils to ensure that “the impact on the individual service user” was paramount in any decision on charges.

Lack of safety nets

He said disabled people were twice as likely to live in poverty as non-disabled people and lacked a number of the safety nets that would help others weather the recession, such as savings.

He added: “If you have local authorities trying to claw back money disabled people are among the groups in society least able to take the hit.”

Recently, one of the biggest care and nursing home providers, Four Seasons, was given until July to restructure its debt by its main creditors, after a previous deadline of 22 January expired.

Martin Green, chief executive of umbrella body the English Community Care Association, said providers were having to “look at every single aspect of their budgets” and were cutting back on developing their services.

He said he had seen no evidence so far of providers exiting the market but it was “always a danger”.

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