The rising cost of care homes
The average cost of a place in a care home has risen to over £30,000 a year, according to a new report. This is more than double the average pensioner’s income, leading to a huge financial shortfall for those who require residential care.
The data, which comes from Prestige Nursing + Care, illustrates a large rise in costs since 2012 (when the company began collating this information). It shows that an average single room in a UK residential care home costs £30,926, whereas the average annual income for a pensioner is £14,456, which would cover less than six months’ care.
The rise in costs can be partly attributed to the National Living Wage, which was introduced by the Government in April, increasing the amount that needs to be paid to workers over the age of 25. Cuts to social care funding is another factor, as local authorities pay less for places for residents that they fund, which pushes up the cost of rooms for private residents. Funding is granted on a means-tested eligibility based on the value of assets and the individual care needs of the service user.
With councils not paying the full amount of the cost of the room, care homes must either find other ways to make up the shortfall, or risk closing their doors, reducing the number of available care home spaces available. Essex County Council has been in the headlines recently for its proposed ‘placement fees’ that it will pay to the region’s care homes. The council undertook a ‘cost of care’ exercise and determined its fair costs for residential places. However, it seems that the council cannot meet its own fair costs for all providers, leaving many out of pocket. Chief Executive of Care England, Professor Martin Green OBE, says: “Without adequate resourcing care homes will simply cease to exist. They cannot afford to run at a loss. Essex County Council needs to ensure that it funds the cost of care otherwise there will be closures leading to unnecessary stress on many of the county’s most vulnerable people and their families. Care homes are of course a vital part of the local economy providing employment and also the backbone to the NHS.”
While costs are rising for care home fees, another problem is that retirees are currently not adequately planning for potential future care needs. A Citizens Advice survey has shown that only 16% of those polled have budgeted for future care costs. Another 23% haven’t budgeted for it from their pension, but have a back-up plan, such as equity release or selling their home. The remaining 60%, however, have given no thought as to how they would fund care if they needed it. “Care costs can be a heavy financial burden that many people are unprepared for,” says Gillian Guy, Chief Executive of Citizens Advice. “It is unsurprising that many people in their fifties are not thinking about how they will pay for care costs, when the need for this could be 10, 20 or even 30 years away. But this issue does need some attention, otherwise people risk dipping into their pension now only to find they need some of the money later.”
As care home fees rise, and service users have less money to spend on services, care at home is likely to see an increase. According to Prestige Nursing + Care, care at home can save more than £20,000 over care home fees. Homecare options include a service user employing their own paid carer, contracting with a paid carer through an agency or contracting with a self-employed paid carer. Find out more about working with a carer or support worker at home on our dedicated Paid Carers page.
We’d love to hear your thoughts on this topic, and whether you have thought about your future care needs. Please tweet us @YtBoss_uk and let us know.