Funding Increase Welcome But Some Operators Will Continue To Struggle

by | Jan 12, 2017 | Care Home Business Blog

Regular readers of my blog will know I often comment on the current state of social care.  You will all no doubt have seen the recent reports that have come out from the Government, announcing that local authorities are to be allowed to increase council tax, but only on the basis that they use the additional money raised specifically for social care.  The latest change appears to allow local authorities to bring forward the originally suggested 2% increase per annum for three years, such that they can increase to 3% in year 1 and 3% in year 2, thus bringing forward the increases.  Discussions are continuing so expect further changes.

Clearly the impact on local authorities will vary, depending on the level of council tax that is currently being raised and this has led to many in the sector voicing the usual ‘postcode lottery’ comments.

Obviously any increase in funds for social care is a step forward, but as I have commented previously, it is really just fudging around the edges of what is becoming quite a critical position for many operators.  We act for one operator who provides both domiciliary care and supported living services.  Recently, despite being given a significant fee increase by the local authorities in some of the locations in which they trade to cover sleep-ins, these increases, which were backdated to 1st April 2016, have not been paid. Operators then not only find themselves in that strange position of whether or not to sue the local authority but, more importantly, the impact on their business is huge.  I have no doubt that some businesses will struggle despite any potential additional funding that comes as a result of the increase in local authority funding.

Having had much debate with colleagues in the care sector at ‘round the table’ discussions recently, many of us have come to the conclusion that the current Government, along with previous ones, have probably decided that if they do nothing then eventually we will fall into the position where everybody is in fact paying for their care in any regard.

We all appreciate funding the sector is probably quite difficult.  My personal view is that many of the younger generation will eventually accept that they will have to pay for their own care in the future and therefore the sooner they start saving for it, the better.

Colin Peacock accountant nursing and care homes

Colin Peacock
Specialist Business Advisor and Accountant to Nursing and Care Homes


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