Threats to care home places

Are the financial difficulties which care home provider businesses seem to be currently facing their responsibility to manage, a local government responsibility or does the situation require urgent government action?

When the House of Lords was recently told of the situation, the Labour peer Baroness Weaver asked the question following the news that the UK’s largest care provider, Four Seasons Health Care, was facing financial problems due to its £500m debt, which raised the prospect of care homes being closed. It follows the collapse of Southern Cross in 2011, then the largest provider of care homes in the UK, due in part to a large rent bill.

Baroness Weaver said:

“The problem is wider than Four Seasons given the rising costs of care, postponement of the care cap and the inability of cash starved local authorities to increase fees to meet rising costs and demands. The Southern Cross collapse affected 31,000 frail and elderly residents who had to be found alternative care. Surely the minister recognises this and that there needs to be a wider government strategy to ensure the financial sustainability of the sector and deal with the huge scale of closures that will happen unless the funding problems are addressed.”

Baroness Pitkeathley said it is estimated that by 2020 there will be funding gap of £3m for the residential care sector, adding that 15 social care groups warned the chancellor of this before his last Autumn Statement.

Lord Prior, a minister in the Department of Health, commented that managing provider failure in the adult social care market is a local responsibility, noting also that he could not comment on the finances of individual providers. He said:

“The collapse of Southern Cross in 2011 was the main reason why the last government gave the Care Quality Commission (CQC) its market oversight responsibilities, which will give early warning of any failure of a large provider. It is worth noting that the Local Government Association believes at least 95 per cent of local authorities do have contingency plans ready to implement.”