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The Government must step in to bail out councils and rescue the social care sector from collapse, according to a leading care home group.

Care homes across the country, which act as an extension of the NHS and provide valuable community care, face a “three-wave tsunami” that could destroy the sector.

Calculations, based on Palms Row Health Care’s additional costs for COVID-19 in the first month it has tackled the virus, indicate that the sector is spending an additional GBP38.6m a week in tackling the pandemic and caring for residents. [1]

In the first wave, the recommended 15% increase in funding to care homes to cope with COVID-19 has not been passed on in full by councils [2]. In Sheffield the Council has offered just 5% uplift plus a promise to meet additional costs.

However, the additional costs incurred by Palms Row in the first four weeks it fought the pandemic indicate that anything less than 15% would be totally inadequate. [3]

Local authorities have claimed they are not being sufficiently funded by Government and that they are in financial turmoil.

For example, a Sheffield City Council spokesperson claimed that there is a £34.5m funding gap between what is needed and what the government has provided. [4]

In the second wave, after June when Councils re-assess the level of beds required, lower occupancy rates due to COVID-19 casualties could see a further fall in funding which will see care homes forced to lay off dedicated staff if beds are not secured by the NHS and councils. A short term commitment of up to 3 months to cover occupancy voids will not secure viability mid- long term causing homes to collapse before looking at the wider picture of general funding. This collapse could potentially hit the sector before a second wave of COVID-19.

The final wave could be the biggest.

The Government has continually delayed publication of a social care Green Paper - going as far back as 2017. The current Secretary of State has even indicated that it may be scrapped altogether [5]. This means that front line care workers and the owners of care homes have no assurance that their vital services will be fully funded and fully resourced in the long term.

Nicola Richards, Managing Director of Palms Row Health Care, said:

“While care homes are fighting for residents’ lives, we are being abandoned by the authorities who have for too long seen us as a Cinderella service.

“Councils are telling us they don’t have the funding to pass on the money needed to fight coronavirus. Providers are warning that unless beds are guaranteed in the medium-term we may see care homes close or have to lay off the staff that have shown such dedicated service during this national crisis.

“All in all, the blame must lay at the Government’s door. They have delayed their Green Paper on Social Care on countless occasions since 2017 and are still not recommending local authorities pass on the amount needed to cover the crisis. It’s come down to this; providers need uplifts of at least 15% or they will close.

“We have been operating in the dark without a long-term strategy in place. Care homes provide a vital national service and instead of being fully resourced we are facing a three-wave tsunami which could destroy the sector.

“We feel there have been failings of central and local government in relation to COVID-19 and care homes across the country. We should have been afforded the focus, support and protection like the NHS. Sadly, care homes have taken the full force of the impact of this pandemic because of government policy and this could yet get worse.”


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[1] Sheffield local authorities are working on an “open book” approach to refunding care homes for additional costs so PRHC have had to keep detailed records. PRHC spent at least an additional GBP80.93 per resident per week during the first four weeks it tackled COVID-19. Knight Frank calculated in 2019 that there were 477,100 care beds in the UK. PRHC operates 200 beds, constituting a mix of intermediate and nursing beds so are a fair average to use. 477,100 multiplied by 80.93 is GBP38,611,703. If the pandemic lasts a year, this would equate to GBP2,007,808,556 (GBP2.0bn). NOTE: These costs do not include additional incentives to existing staff, back office costs nor represent the real cost of what is needed as care homes are likely to have underspent in order to not incur additional debts.

[2] Local authorities were awarded GBP1.6bn on 19 March 2020 and a further GBP1.6bn on 18 April 2020 to support COVID-19 services such as care homes. The Local Government Association and ADSS recommended councils uplift rates by 10% to meet the COVID-19 challenge. Care England recommends this should be 15%. The Secretary of State for Communities wrote to Councils on 30 April 2020 insisting that 10% is the uplift required, the letter is available to read online.

[3] The uplift from SCC’s GBP505 weekly rate for standard residential care to GBP585.93 is 16.03%.

[4] Sheffield Council statement to the Sheffield Telegraph (and other media). SCC’s share of the GBP3.2bn is GBP36m. SCC have increased the weekly fee rate for a bed from GBP505 to GBP539 with their 5% increase, a rise of GBP25. This difference equates to GBP325 for a 3 month period. SCC calculate that there are 3,557 beds in the city, even assuming all were occupied and paid for, this increase is GBP1,156,025.

[5] Matthew Hancock speaking at the NHS Providers Forum in October 2019, reported in the FT Advisor.

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