The low fees paid to care providers by overstretched local authorities are impacting on care staff and are forcing them to hand back contracts, a new report has found.

Published by health care think tank The King’s Fund and the University of York, the study revealed that providers handed back home care contracts in more than one in three local authority areas last year.

It also discovered that some of the largest providers have withdrawn from the publicly funded home care market altogether.

The findings are published as one major home care provider, Allied Healthcare, is sold and transfers many of its contracts to other providers.

Entitled Home care in England: views from commissioners and providers, the report found that staff shortages are a ‘relentless challenge’ for home care providers in many places.

The fees paid by councils are too low to maintain quality services, it warned.

Four in 10 home care workers leave their role every year and more than half are on zero hours contracts.

In 2016/17 around 500 new home care agencies registered each quarter and 400 left the market.

In a 2017 survey, many council directors of adult social services had experienced home care providers ceasing to trade in the previous six months (39%) or having contracts handed back (37%).

'Squeezed funding and a shortage of workers have left the home care sector in a fragile state,’ said Simon Bottery, senior fellow, social care, at The King’s Fund.

‘Home care providers are competing for staff with other sectors paying higher wages, offering more stable employment and better working conditions.

'The 249 million hours of home care delivered each year, much of it publicly-funded, has huge potential to improve people’s health and promote their independence.

‘The system needs a fundamental overhaul, beginning with the upcoming Green Paper, but the prize of a better, more effective home care service is worth having.’

Commenting on the report, Cllr Ian Hudspeth, chairman of the Local Government Association’s (LGA) Community Wellbeing Board, said: ‘The squeeze on local government funding overall, coupled with rising demand and increasing cost pressures in adult social care, mean many councils are having to make significant savings and reductions within adult social care, which is impacting on an ever more fragile provider market.’

He called on the Government to plug the £3.5bn funding gap facing adult social care by 2025 ‘to ensure that quality home care provision is available.’