Care sector ‘unsustainable’ without more support despite energy bills package, warn providers

Care England joins councils in welcoming 'much needed' energy costs relief for businesses, charities and public sector but says care homes still faces fourfold increase in bills

review meeting
Photo: jcomp/Fotolia

The care sector remains “unsustainable” in the face of spiralling energy costs despite the “much needed relief” provided by the government’s support package for business, charities and the public sector.

That was the warning from provider umbrella body Care England, despite its welcome for the energy bill relief scheme unveiled yesterday by business secretary Jacob Rees-Mogg.

Under the plan, the government will cap energy costs for non-domestic customers at an expected £211 per MWh for electricity and £75 per MWh for gas, less than half the wholesale prices anticipated this winter. This applies to fixed-price contracts agreed since 1 April 2022 and all flexible or variable tarrif contracts, and will be in place from 1 October until 31 March 2023.

Last month, Care England and energy consultancy Box Power Consultancy released figures showing that care homes were being charged £5,166 a year per bed to pay for a year’s gas and electricity from October 2022, for which they would have been charged £660 per bed had they forward purchased it in August 2021.

Care England chief executive Martin Green said the relief scheme would “provide much-needed reassurance to care services across the country, which have struggled with exponential increases in energy prices over recent months”.

However, he said that providers would still face bills from October that were four times what they would have paid in August last year, meaning the relief scheme could only be a first step, with rising costs leaving the sector “unsustainable going forwards without further action”.

He urged the government to at least waive VAT on energy costs for care homes, if not exempting the sector from VAT altogether, as part of plans to support businesses from March 2023.

For councils, the Local Government Association welcomed the inclusion of councils in the scheme, saying this should help mitigate some of the inflationary pressures authorities were currently facing.

However, LGA resources board chair Andrew Western warned that councils also needed more support.

“Alongside energy bills, councils are also facing massive increases in costs due to spiralling inflation and National Living Wage increases both this year and in future years,” he said. “This is forcing councils to reset budgets leading to cuts to local services just to meet their legal duty to balance the books.

“Further government support will be needed by councils and residents to cope with these ongoing pressures and to protect the services that our communities rely on every day and will be vital to help residents cope through the cost-of-living crisis.”

Chancellor of the Exchequer Kwasi Kwarteng said the government’s relief scheme would “stop businesses collapsing, protect jobs, and limit inflation”.


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One Response to Care sector ‘unsustainable’ without more support despite energy bills package, warn providers

  1. Anonymous September 26, 2022 at 5:36 am #

    The rate per kwt is now cheaper than a domestic user. I’d have to work it out properly, but with a quick calculation wouldn’t the new cap only increase bed price by an average of £11.50 per week now. So the exemption from VAT would balance the cost completely.