Care home funding crisis could see thousands of beds close, report warns

The care home sector could see thousands of beds close within five years because of the financial crisis facing services, a report has predicted.

Providers will be forced to close as many as 37,000 care home beds by April 2020 in the face of a £1.1bn funding shortfall, the Respublica think-tank claimed. Care homes are being squeezed by cuts to fees from local authorities, rising demand and growing staffing costs.

Local authority spending on social care for older people has fallen by 17% in real terms since 2009. The introduction of the national living wage from next April is set to add to staffing costs.

The “perilous” state of the care home industry means it could not cope with the failure of a major provider, the report added. This means most residents affected by closures will end up in hospitals, costing the NHS an estimated £3bn a year.

Phillip Blond, director of Respublica, said: “When Southern Cross failed [in 2011] the private sector stepped in and cared for those left homeless. Now, however, with the sector losing money for every funded resident there is no provider of last resort.”

Martin Green, chief executive of Care England, said the report added to a “growing mountain of evidence” of a crisis in the care sector.

“This report starkly illustrates the interdependence between health and social care and shows the dire consequences for both citizens and the system, if the government does not increase care funding,” he said.

Councillor Izzi Seccombe, the Local Government Association’s community wellbeing spokesperson, said the care sector was heading for a “devastating” collapse.

“It is unacceptable to leave our elderly friends and family living in a care limbo, not knowing where they will live if a care home closes and worrying about the care they rely on,” she said.

“Health and social care leaders widely recognise that a properly funded social care system is essential to alleviate the pressures on the NHS. Without proper funding councils are going to be left struggling to keep people out of hospitals and in their own homes and communities.

“It is imperative that the government fully addresses this in the spending review before we see a care disaster unfold.”