Care Homes Costs No Longer Outpacing Council Fees But No Sign Of Operators Recoupling The 5% Real Terms Fee Cut Since 2010-11

The latest, 5th edition of Fair Price for Care, the market leading care home cost model developed by independent healthcare experts LaingBuisson, has been published.

Incorporating results from over 1,000 respondents to the company’s autumn 2013 care home survey, it finds that a typical care home for older people is faced with cost increases of 1.9% in 2013/14, while councils’ baseline fees have risen by 1.7% in England (1.8% in the UK).

With costs and council fees more or less tracking each other, this means that the sector as a whole should not be subject to any further margin reduction this year.

CEO of LaingBuisson William Laing commented: ‘This will come as a welcome respite to care home operators, but it has only been achieved by a slowdown in staff pay rates, which will store up further pressures as employers strive to contain staff turnover and maintain quality with a low-paid workforce’

Mr Laing added: ‘There is no expectation whatsoever that care homes catering for publicly paid residents will be able to recoup the 5.2% real terms cut in council-paid fees they have had to absorb over the last 4 years since local authorities started to impose sub-inflation fee upratings in 2010/11 in response to government austerity measures.’

Average council fees remain between £31 and £130 per week below the minimum or ‘floor’ level that the ‘Fair Price’ model calculates is necessary to offer investors and operators a reasonable return. As a result, most care homes depend for their commercial viability on private payers who heavily subsidise publicly-paid residents.

Gap between ‘Fair Market Fees’ and average fees paid by English councils for residential care

Fair fee as calculated by the Fair Price for Care toolkit spreadsheet, October 2013 – March 2014

Residential care, older people  £531 per week  £600 per week
Residential care, dementia  £559 per week  £630 per week

Average fee paid by English councils

Residential care, older people, including dementia) £500 per week*


*Extrapolated from 2012/13 out-turn using changes in baseline fee rates for 2013/14















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