Care homes in west ‘at risk of bankruptcy’ due to NI rises

A leading care association in the west is warning some residential homes may go under due to rising costs such as National Insurance (NI) and the national living wage.

David Smallacombe, chief executive of not-for-profit organisation Care and Support West, says many care home operators will be forced to raise prices for vulnerable residents.

He is calling on the government to exempt social care providers from the NI hike, as it already has for the public sector and NHS.

A spokesperson for the Department of Health and Social Care (DHSC) said it was working towards building a National Care Service “that is fair and affordable for all”.

Care and Support West, which is funded by care home providers and also by four councils in the region, has calculated the tax rises will cost an extra £2,500 per staff member in care organisations.

Care home residents may entirely self-fund their place, or be partially or fully-funded by their local authority depending on the findings of a means test.

Mr Smallacombe said: “Local authorities would, if they could try to meet that, find themselves in a position where they have not got the right amount of money coming in from central government to fit that.

“It’s likely that some business will go out of business, which is a real worry.”

He added: “It will make a big difference into how these organisation manage themselves – some will find either owners or managers doing care shifts at no charge. Sometimes they will have had to eat into the reserves.”

A resident of a care home in Patchway told the BBC of his shock at receiving a letter from the provider telling him he would face a 30% jump in fees due to rising costs, primarily NI.

The man, who did not wish to be named, was told his contribution to fees would rise from £460 to more than £600 per week.

He said: “[Berkley Care Group] suggested the contribution from the council was to go up by 2% because they couldn’t get any higher as the council is broke.

“But they put the cost up to the resident by 30% – I just blew a fuse. They can’t do that, it’s just profiteering.”

After telling Berkley he would take the matter to the BBC and his MP, the resident was told his contributions would only rise to £506 per week.

Berkeley’s chief executive Laura Perry said this was an “isolated case” and that a “miscalculation” had occurred during the review process for the resident and had been immediately corrected.

She said the group had offered a full personal apology to the man.

But she added: “Like all care providers up and down the country, we’ve been hit hard by the increase in employer National Insurance contributions.

“We’ve tried to shield our residents from these cost increases as much as possible and have ensured that our fee increase remained lower than many of our competitors.

“Nevertheless, careful fee adjustments for 646 of our residents have had to be made.”

A DHSC spokesperson said the government had allocated an additional £3.7bn to local authorities to help meet the cost of social care, and a further £502m to support them with NI rises.

“This government inherited an extremely damaged economy, NHS and social care sector, but we are turning this around through our Plan for Change,” they said.

The spokesperson added: “Baroness Louise Casey will be starting her independent commission into adult social care this month to build cross-party consensus for a National Care Service and a system fit for the future that is fair and affordable for all.”