The outlook for care homes in the UK ranges from serious to critical, as staff costs, nurse shortages, poor funding and increasing red tape are draining the lifeblood out of the sector.
The prognosis is given in a new survey for BBC Radio 4 that shows urgent surgery is needed to save care homes from rising costs and reducing resources. A new injection of local authority funding is urgently needed as more than a quarter of UK care homes are in danger of closure within three years, according to the survey.
The BBC research also revealed care homes were carrying too much debt and were not making enough profit to cover loan repayments.
Whilst most local authorities have this year added a 2% hike to council tax to help pay for social care, this money has yet to seep through to care homes, though concerns have been raised that this money will still not be enough.
Care homes are reeling from the new national living wage of £7.20 per hour for staff over the age of 25 introduced in April this year. Pressure on the sector is set to increase further as the living wage is expected to rise to £9 per hour by 2020.
The survey revealed that the national living wage not only pushes up the pay of those on lower scales, but across all staff bandings. Care homes are concerned that their rising payroll costs are not being met by cash-strapped local authorities who are unwilling or unable to match the increase. There is also anxiety over government plans to further restrict migrant labour, as this will add to the staff shortages in an industry where a high number of migrant staff are already employed.
Rising wages comes on top of pension auto enrolment, which is a complex issue for care homes due to the high level of part-time and short-term workers. The regulatory burden on the sector in the form of increasing red tape and above-inflation rises in fees levied by the Care Quality Commission are also having their effect.
Bishop Fleming Partner, Tim Godfrey, who heads the Care Home Sector team, commented: “The survey reveals a care sector in a really serious to critical condition as care homes struggle to adapt to increasing pressures on their resources. Many are having to freeze their recruitment plans or drastically change their business models just to survive.”
Mr Godfrey explained: “Care homes funded by local authorities face closure unless these authorities meet the rising cost pressures. Whilst some councils have increased funding, it is clearly not enough to cover the burden.”
“Beds will have to close and jobs will be at risk. Ultimately, the quality of care being offered will deteriorate,” he added.