Pensions  

Under-funding and living wage will lead to £3bn yearly NHS bill

Under-funding and living wage will lead to £3bn yearly NHS bill

Chronic under-funding and the national living wage will cause a loss of 37,000 beds in Britain’s care homes and result in a £3bn yearly bill for the NHS, which may get passed onto self-funders, according to think-tank ResPublica

According to the 15-page report: The Care Collapse: The imminent crisis in residential care and its impact on the NHS, a 17 per cent reduction in local authority spending since 2009/10 on care for the elderly has created a shortfall of between £31-£50 a resident against the cost of provision, and by 2020/21 the sector will need an extra £1.1bn a year.

The report also blamed the new national living wage for causing an £382m funding gap, as the wage will disproportionately affect labour-intensive residential care providers. The report warned that without action, care operators would be forced to shut their doors – putting further pressure on the NHS – or pass on higher costs to self-funders.

ResPublica said the looming crisis had echoes of the 2011 collapse of Britain’s largest care homes operator, Southern Cross Healthcare, which ran 750 care homes.

Phillip Blond, director of ResPublica, said: “When Southern Cross failed the private sector stepped in and cared for those left homeless. Now, however, with the sector losing money for every funded resident there is no provider of last resort.

“We fear the worst-case scenario is the most likely, that these residents will flood our local general hospitals costing £3bn a year by 2020.”

Report facts
Predicted funding gap by 2020/21: £1bn
Funding gap caused by the national living wage: £382m
Number of care beds lost: 37,000
Over-65s make up 18 per cent of population

Adviser view

Ruth Whitehead, IFA at London-based Ruth Whitehead Associates, said: “The crisis is already here. No one has the adequate resources to take care of the huge baby boomer population, and the elderly are falling through the cracks.

“Profits should not be made from people being ill. Residents are exploited and employees are exploited by owners. I don’t feel at all sympathetic towards care home owners who should should operate an efficient business model and run a decent service.”