Friday 14 December 2018
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Crisis- what crisis? understanding the social care sector

There could only be one topic for a blog this week! ‘Crisis, what crisis?’ was the title of the 1975 album by Supertramp and has been credited with bringing an end to the Labour government of 1979 as it conveyed a sense that things had gotten out of control. Finally a report about the crisis in care services ignited the mainstream media – even if only briefly this week. Actually the report was about care homes, rather than care services, but the story was essentially the same: providers are about to find out whether the pressure on local authority fees will ease. 

It's a curious mix of issues that makes this a news story. Research by an insolvency agency commissioned for the BBC Radio 4 'You and Yours', which aired on Wednesday 4 May, offered a rather chilling assessment of the state of the care home sector. Although the report didn't say anything that hasn't been said by many commentators from across the care sector on many occasions in the last few years they did put a figure on the care homes they deemed "at risk" of closure. This was the 'sit up and take notice' bit - their judgement was that almost a third of care homes (some 5,600 care homes) could be classified as at risk of closing due to the current business trading circumstances. Furthermore, Opus (the insolvency specialists) described 13% of care homes as "zombie operators" paying more in interest and debt repayments than they make in profits. As NCF members will know, many of the same pressures exist for not-for-profit care providers needing to make a surplus to be sustainable. And, it is not just care homes that are struggling to manage these challenges as the home care sector has its own concerns - and isn't backed by property assets.

The other news this week was the announcement by Four Seasons, the largest care home provider in the UK, of reported losses of £264m for 2015, said to be down by 40% on the previous year. The story broke the day before the local elections which is also significant in that local authorities hold a big part of the key to solving the crisis. The fees paid for social care by local authorities have long been a part of the problem which has been compounded by at least five years or more of austerity measures. The consequence is that fees have fallen in real terms and the newly implemented National Living Wage looks likely to increase the pressure on costs still further.

The government made the decision early in their parliamentary term to postpone Part 2 of the Care Act which was intended to introduce a new model of funding. Whilst these proposals watered down the recommendations of the Dilnot Commission they did at least offer a framework for addressing funding of social care for the longer term. The reforms will now not happen until at least April 2020 (a few weeks before the next General Election!). So, the Chancellor's announcement in the recent autumn statement that local authorities could increase council tax by an additional 2% to help cover the costs of social care is meant to provide some much needed extra income for the care sector. The majority of councils have indicated that they will levy the social care 'precept' but as yet there appears to be no firm figure on how many will actually pass this money on to care providers in the form of an increase in fee rates for care services. In fact, wide variations are emerging in how local authorities will use any additional money to manage their local care markets. As we outlined in our recent report ‘Influencing social care commissioning and procurement’ (the third in a series of papers on financial sustainability) a more balanced relationship between commissioners and providers is essential.

It is at local level that the impact of any significant loss of care provision will be felt and this will obviously vary across the country. It is vital that providers are working in partnership with commissioners if we are to avoid making the crisis in care worse than it is already. It is perverse that whilst policy exhortations are made for greater integration of care and health, along with calls for a shift to prevention and early intervention to relief pressures on acute care, cuts in local authority funding mean that people are denied support when they most need it. People end up needing more care, at a higher cost, because of the lack of preventative support. It is a reminder that any difficulties in one part of the system will have an impact on the other. 

I don't know whether the predictions about the loss of care homes will prove accurate. The loss of 5,600 care homes would certainly have a major impact – for people needing care and support, their families, staff, hospitals and the wider NHS economy. I do believe that there will be more care home closures and that care providers will continue to withdraw from service provision. We are already seeing this happen amongst NCF members as we are right across the care sector. I tried to make as many of these points as I could in a short television interview I did for BBC Look North on Wednesday evening. It feels like the very start of a conversation through the media to encourage better public understanding of what is happening to the social care sector. It has never been more urgent.

Des Kelly OBE | Executive Director | National Care Forum