Headlines: May 20th, 2004

A report out today says care homes for older people are still underfunded despite above-inflation increases in fees paid by local authorities. New calculations for the Joseph Rowntree Foundation show Councils are now paying close to the rate required for homes meeting the minimum level of facilities but that another billion pounds a year is needed across England to pay for fully modernised independent care homes.The report has been drawn up by William Laing, a health and community care analyst, who reported two years ago on the gap between council fees and the reasonable costs of running a good quality care home. His new findings show that since then many local authorities have increased the fees they pay by more than inflation and in a few cases by substantial amounts. No English council, though, has set a baseline rate appropriate for the more demanding standards set for new homes, registered after April 2002.

The study shows the average gap between a ‘fair fee’ for homes meeting the higher standard and the actual fees that councils are prepared to pay is 127 pounds a week for nursing care and 83 pounds for personal care. Using those figures he calculates that the extra cost to the public sector of fees for a fully modernised care home sector would be a billion pounds a year.

Today’s report offers a toolkit that councils can use to calculate a fair price for residential places. It takes into account changes in costs following the regulatory requirements brought in two years ago and includes a reduction in the return that investors in care homes would expect on their capital – down from 16 per cent in 2002 to 14 per cent now. It calculates fair fees for the different standards that apply to existing and new homes, described as ‘floor’ and ‘ceiling’ fees. For example, in a low-cost area, the ‘floor’ fee for personal care is put at 312 pounds a week and the ‘ceiling’ at 392 pounds. For the London area the equivalent figures are 409 and 488 pounds respectively.