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LTC self-funders pay 40% more as care homes seek to close funding gap

10 December 2017

UK care homes are facing a unsustainable £1 billion a year funding shortfall as a result of councils not paying enough money, according to the findings by The Competition and Markets Authority (CMA) report.

The report found that many care homes were charging self-paying residents higher fees to compensate for the funding gap. On average, the fees for those who self-fund their care were around 40% higher than those paid for by the council.

Steven Cameron, pensions director at Aegon, said: “The findings of this review leave no doubt that the government must take social care funding seriously and put it back at the top of the agenda. Evidence of a funding shortfall of £1 billion a year across the UK and a social care industry that is forced to prop up its finances through unfair charging structures for self-funders surely deserve some attention. Part of the solution must be helping individuals plan ahead with certainty to cover their share.

“Social care for the elderly and how it should be paid for will touch every family across the UK. The Government promised in its Manifesto to consult on social care funding including introducing an overall cap on how much any individual would be expected to pay.”

Cameron said the government’s recent announcement of another delay in consulting was a “frustrating blow” and leaves individuals who want to do the right thing and plan ahead for care costs in limbo.

“While it’s grudgingly accepted that preparations for Brexit are leaving little room for any significant new policies, there will always be a reason to delay. Social care funding will be a key societal issue impacting millions of us long after Brexit is a footnote in the history books,” he added.

Sector must grow

The CMA report warned that the sector must “grow substantially” to meet the needs of an ageing population, and more must be done to ensure protection for people in care homes.

The findings showed residents and their families often find it difficult to raise concerns or make complaints and the systems for redress and feedback require improvement. It highlighted homes not being clear enough up front about their fees or terms and conditions and the failure to protect residents’ deposits effectively against the risk of insolvency.

CMA chief executive Andrea Coscelli said: “Without substantial reform to the way that councils plan and commission care, and greater confidence that the costs of providing care will be covered, the UK also won’t be able to meet the growing needs of its ageing population.

“It is essential that residents and their families can make informed choices, understand how these services will be paid for, and be confident they will be fairly treated and able to complain effectively if they have concerns. We are now calling on care homes, councils and government bodies to help people navigate what can be a confusing system.”

Who pays and how much?

Aegon carried out its own consumer research into social care funding options, which revealed keen interest among all age groups in finding a solution, with 56% expressing an interest in making advance provision for social care.

Only one in 4 people believed the Government should cover all costs, with the remainder accepting the need for individuals to pay their fair share. However, almost 9 in 10 believed there should be an overall maximum an individual should have to pay.

Cameron added: “Taking people’s house value into account when determining if people have sufficient assets to be paying for care is controversial with a clear majority of people unwilling to sacrifice their home. Our research shows a strong interest in coming up with solutions to this huge societal challenge and the Government needs to advance its long overdue consultation which needs to look at a wide range of options if we are to meet individual preferences and encourage as many people as possible to plan ahead.”

The care homes sector is currently worth around £15.9 billion a year, with 11,300 care homes housing 410,000 residents.