The care system is ‘fragile’ due to ‘inadequate and unsustainable’ fees from local authorities, independent care providers say.

Care England, the largest representative body for independent providers of adult social care, has warned higher staffing costs, falling profits and an increase in demand will lead to fewer council placements with private care providers in the future.

A survey carried out by Care England revealed 96% of providers expected their overall staffing budget to increase this year and all expected further increases over the next three years to keep pace with demand.

It also found only 10% of providers expected profit margins to increase in 2017/18 and this slightly increased to 15% projecting an increase in profit over the next three years.

Conversely, 55% of providers were projecting a fall in profits up to 2020.

As a result of these pressures, 32% of providers projected a decrease in placements this year which increased to 45% of providers projecting to take on less local authority placements over the next three years.

‘Care England’s survey makes is clear that providers are expecting higher staffing costs and falling profits whilst demand continues to increase,’ said Professor Martin Green, chief executive of Care England.

‘In order to manage this, providers are anticipating fewer local authority placements while investing in technology and services to respond to demand. 

‘The sector can and must adapt, but dynamics are shifting and unless local authorities pay the commensurate rate to providers there will be a lack of capacity for local authority funded residents and the ongoing workforce challenges will not be addressed.’

Care England’s warnings come amid cuts to councils and a social care funding crisis. According to a Health Foundation report published last May, the care system faces a funding gap of £2.1bn by 2019/20.