Funding gap for care home charges filled by service users, says report

By Katherine Purvis

Councils are not paying enough to fund care home places and residents are plugging the gap, new figures from care market analysis firm LaingBuisson have revealed.

According to the firm’s updated care cost benchmarks toolkit, released today, care homes for older people in England need to charge between £623 and £726 a week, depending on the standard of accommodation and whether the home provides care for people with dementia. On average, however, councils pay just £555 per week, leaving a shortfall of between £68 and £171.

The market analyst said this means residents who pay for their care are keeping the sector afloat, filling a funding gap of £1 billion in 2017/2018.

Fees charged by care homes based on premises and care provided

Source: LaingBuisson

‘Large shortfalls continue’

The adoption of the national living wage and the need to employ more carers to support residents with complex dependencies has fuelled an “inexorable rise” in care home costs, said William Laing, founder of LaingBuisson and creator of the care cost benchmarks.

“A minority of councils have seen the light and have raised fees to sustain supply, but large shortfalls continue for care homes in most council areas,” he said. “… It will cost £1 billion to plug the hole in fees, before even starting to think about additional services.”

Staffing is the largest cost for care homes, taking up more than 50% of fees, the report said.

With an 4.4% increase in the National Living Wage from April, and other cost inflations, care homes will soon need to charge even more in fees. But according to LaingBuisson’s report, anecdotal evidence shows care homes can currently continue to withstand falls in fees below the care cost benchmark before needing to stop services.