Private fee payers are plugging a £1.3bn care home funding gap, according to LaingBuisson.
The Care Cost Benchmarks report has found that fees are underfunding the cost of care by an average of more than £100 per week.
LaingBuisson founder William Laing said: “Most councils responsible for supporting publicly funded residents do not have the budgets to pay a reasonable cost for care and despite councils’ freedom to raise further funds from the Social Care Precept, the situation is unlikely to change in 2017/18.
“The entire care home sector for older people is being kept afloat through cross subsidies from the 40% of care home residents who pay privately. We have conservatively estimated the shortfall in council paid care home fees at about £1.3bn a year in England alone, being the difference between what councils actually pay in care home fees and what they would pay if Care Cost Benchmark rates were applied to the existing mix of homes.
“The £1.3bn can equally be viewed as a hidden ‘care tax’ that government and councils are content to see private payers contributing to keep mixed funding homes in business. This ‘care tax’ equates to about £8,000 a year on average per privately paying care home resident. Moreover, in all probability it will take another step upwards in April 2017 as care home owners seek to recover increased costs.”
The report finds that care homes in England need to charge between average weekly fees of between £590 and £648 to make a reasonable capital return, the latter figure representing the fee level required by new premises.
LaingBuisson estimates that the average weekly fee paid by local authorities was £486 in 2016/17.