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Care England: councils have been underfunding care homes by £2bn

Local authorities in England underfunded older people’s residential and nursing care homes by over £2bn per annum during 2021/22, according to Care England research.

This does not even account for inflation, which peaked at over 11 per cent in 2022 and is projected to exceed 7 per cent for 2023-24 according to the care organisation.

Its research follows a comparison of the average fee rates currently paid by councils across England and authorities’ submissions to the DHSC seen by Care England following the Fair Cost of Care exercise.

The Fair Cost of Care was a government-led exercise designed to achieve a shared understanding of the local cost of providing care.

However, Care England research shows that the average difference between council funding for residential care fees and the fair cost of care was £218 per week, whilst this figure increases to £231 per week for nursing care.

Among the regions of highest underfunding concerns is the South East region: to meet the fair cost of care identified for the region, average fees paid in 2021-22 for residential care would need to rise by over 32 per cent and for nursing care by over 25 per cent.

However, four local authorities: Dorset, Newcastle upon Tyne, Reading and St. Helens, reported the fair cost of care rate below the average fee rate they already paid to care homes. This throws questions on the accuracy of their fair cost of care calculations or average fee data reported, asserts Care England.

Professor Martin Green OBE, chief executive of Care England, says: “The £7.5bn [planned two-year investment in social care] will not scratch the surface in tackling… underfunding care packages and the rising gap between fees paid and the cost of care caused by inflation. The core purpose of the Fair Cost of Care Exercise was aimed at increasing sustainability. This reality must now be realised.”


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