William Eichler 25 April 2016

Care home insolvencies increase as sector pushed to 'breaking point'

The number of care home insolvencies has jumped by 18%, as local authority spending on care homes continues to fall.

New research by Moore Stephens, an accounting and advisory network, discovered 47 care home operators in England and Wales became insolvent last year, up from 40 the previous year.

It also revealed the number of care home businesses becoming insolvent has risen by 34% over three years. There were 35 in 2012/13.

Moore Stephens argues the insolvencies are the result of the decline in council spending on care homes and warns there will be a £2.9bn annual funding gap in social care by the end of the decade.

This will be partly the result of the UK's aging population, which is predicted to rise by 12% - or 1.1m - between 2015 and 2020.

The new research also suggests the introduction of the mandatory national living wage this month will add to the financial burden of the care sector.

The financial restructuring of the Four Seasons group, Britain's biggest care home operator, has also made it difficult to find finance for the sector.

Moore Stephens partner Mike Finch explains: 'Care homes have come under increasing financial strain and, with a sharp increase in their wage bill, many more risk being pushed to breaking point.

'With funding from local authorities contributing a substantial amount to the revenue of care homes there is understandable concern of the impact any further spending cuts would have on the sector. This is especially important as the cost of care in the UK remains high.'

Mr Finch welcomes the social care precept, which has been taken up by 95% of eligible authorities, but warns it will not be enough.

'Although legislation giving local authorities powers to increase council tax by 2% to help fund social care is a step in the right direction, there is real concern that this will not meet the spike in demand caused by the UK's aging population.'

He also argues the cost of regulations and property rents are placing a strain on the sector.

SIGN UP
For your free daily news bulletin
Highways jobs

Social Worker - DBIT (Core) MID

Essex County Council
£37185.0000 - £50081.0000 per annum
Social Worker - DBIT (Core) MIDFixed Term, Full Time£37,185 to £50,081 per annum Location
Recuriter: Essex County Council

Senior Social Worker - Neighbourhood Team

Essex County Council
£46574.0000 - £56027.0000 per annum + Flexible Working, Hybrid Working
This is a part time opportunity for 22.5 hours per week. These hours will cover 3 days including a Thursday and Friday, plus one other day that can England, Essex, Clacton-On-Sea
Recuriter: Essex County Council

Markets Team Manager (Strategic Commissioning Manager)

The Royal Borough of Kensington & Chelsea Council
Negotiable
Drive real change in your community - shape the future of careDrive real change in your community - shape the future of careAt the Royal Borough of Ke England, London
Recuriter: The Royal Borough of Kensington & Chelsea Council

School Effectiveness Partner

Essex County Council
£62725.0000 - £73793.0000 per annum
School Effectiveness PartnerPermanent, Full Time£62,725 to £73,793 per annumLocation
Recuriter: Essex County Council

School Crossing Officer - Danbury Park Community School

Essex County Council
Up to £13.00 per hour
School Crossing Officer - Danbury Park Community SchoolPermanent, Part Time£13.00 per hourLocation
Recuriter: Essex County Council
Linkedin Banner