Dire warning for care crisis to turn into meltdown within four years

Paul Burstow MP, Liberal Democrat Shadow Spokesman on Older People, today released new figures showing that there will be more people requiring care home beds that there are available within 3 years.

The dire warning follows publication of new figures by Mr Burstow which forecast that if current trends continue, the number of people needing long term care will for the first time ever exceed the number of care home places available by June 2005. Mr Burstow published figures based on 2000 home closures that showed that the numbers of people would exceed places in 2006/7, but the acceleration in the closure of homes in 2001/2 and forecast for 2002/3 has meant an acceleration in the meltdown.

Paul Burstow MP said

"Ministers have had their heads in the sand for far too long. The loss of care homes has been unforeseen, unstructured, and unplanned in Whitehall. The victims are vulnerable elderly people forced to pack up and leave what has become their home. For some the trauma is too much and costs them their lives.

"These figures must be a wake up call to the Government. We are in real danger of Government inaction turning the crisis in the care home sector into a meltdown. The clock is ticking; unless the Chancellor acts decisively now and restores confidence in the care home sector, more homes will close their doors.

"The warning signs have been there for a long time. Low fee levels, increases in the older population, and poor long term planning have left the care system in a state of freefall.

"The Government has no figures for how long it takes to open a new care home from scratch. It takes weeks to close a home and years to open a new one.

"Fees must rise. Not to line the pockets of care home owners, but to pay a decent wage to care workers to recruit and retain the right staff.

ENDS

Notes to editors:

Figures are taken from Laing and Buisson Care of Elderly People Market Survey 2001and based on current trends analysed over either the past 3 or 5 years show that there will be more people than beds by between mid 2005 to mid 2007.

Year Total Number of People in Care in the UK Number of Beds in UK (based of 5 year closure pattern) Number of beds in UK (based on 3 year closure pattern)

1998 437988 564100 564100

1999 442936 551100 551100

2000 447439 538500 538500

2001 450330 525900 525900

2002(i) 450259 520036 513300

2003(i) 447542 511384 500700

2004(i) 446486 502731 488100

2005(i) 459020 494079 475500

2006(i) 468288 485426 462900

2007(i) 471654 476774 450300

2008* 475020 468121

2009* 482975

2010* 490931

2011 498886

(i) Estimated projections of care home closures are based on an average number of closures over the previous 5 or previous 3 years according to market statistics. The closure of care homes has significantly increased over the last 3 years, and it is more than likely that there will be an acceleration rather than a slow down. See the reasons below why this may well be the case

• Estimated projections on the growth of those requiring long term care based on the growth of the older population by 2011.

There are already regional hotspots where demand exceeds supply such as in Birmingham and London and the South East

The number of people is based on Laing and Buisson projections as seen below:-

Figures taken from Laing and Buisson, showing the number of older people in the UK and the percentage in each age group requiring care in a residential setting.

Year 65-74 %age in care Number of people in care 75-84 %age in care Number of people in care 85+ %age in care Number of people in care

1998 4965000 1 49650 3205000 4.8 153840 1122000 20.9 234498

1999 4928000 1 49280 3220000 4.8 154560 1144000 20.9 239096

2000 4914000 1 49140 3234000 4.8 155232 1163000 20.9 243067

2001 4908000 1 49080 3265000 4.8 156720 1170000 20.9 244530

2002 4921000 1 49210 3300000 4.8 158400 1161000 20.9 242649

2003 4951000 1 49510 3346000 4.8 160608 1136000 20.9 237424

2004 4983000 1 49830 3387000 4.8 162576 1120000 20.9 234080

2005 5001000 1 50010 3357000 4.8 161136 1186000 20.9 247874

2006 4987000 1 49870 3344000 4.8 160512 1234000 20.9 257906

2011 5477000 1 54770 3383000 4.8 162384 1348000 20.9 281732

Figures taken between 2007 and 2010 have been estimated using the projections given above

The PSSRU Quarterly Health Statistics, Winter 2001, found that by 2031 670,000 residential care places would be needed in England alone. Given this figure, it is estimated that the care home market in England will need to grow by around 65% from today's situation.

Why care home closures are likely to accelerate rather than decelerate:-

The issues

There are a number of pressures on the care home sector:

1. Inadequate fee income and cost pressures;

2. Staff shortages;

3. Property prices;

4. National minimum standards that come into effect from April 2002;

5. Retiring care homeowners.

Care Home Fees

Fees have risen on average by 2% for state funded placements and 5% for self-funders. Fee increases have been depressed for the last five or six years and reflect pressures on social services budgets. It means that self-funders and care homeowners are subsidising state funded residents.

There is also a wide range of fees paid across the country. For example in Islington it is £856 pr week. However in other areas, such as Kent, they receive only £333 per week. Kent has lost ¼ of its residential care beds in the last year alone and is consequently exploring the possibility of sending older people to care homes in France or Belgium, where it is cheaper and there is excess supply.

The difference in fee levels between neighbouring local authorities has also resulted in the poaching of care home places. So, again in Kent, London social services departments who pay considerably more, are purchasing a large number of care home beds in the north of the county. This problem may get worse with the payment of a special grant to social services to tackle bed blocking as those social services department who receive the grant use the money to increase their fee rates.

Liberal Democrats have called for an independent review of care home capacity and the development of a national strategy and local action plans to secure an adequate supply of beds. The review needs to look at fee levels, local labour market constraints and the costs associated with complying with the national minimum standards.

Staff Shortages

There are serious shortages of care home staff across the country. The squeeze on fees has put pressure on pay levels and owners find themselves in competition with the local supermarket.

Some nursing homes now have to use agency nurses to meet existing regulations. Again this put pressure on an already difficult bottom line. Liberal Democrats have argued that better pay is necessary to aid recruitment and retention, but this should be in exchange for higher standards in terms of the ratio of trained staff to residents.

Liberal Democrats highlighted this issue at our Conference in Bournemouth in September 2001. "The looming care crisis". The review outlined above would also address the labour market issues.

Property Prices

In the south of England, land and property values have risen dramatically and are continuing to do so. For care homeowners struggling to balance the books it is becoming increasingly attractive to opt to close the home and sell the property for redevelopment. Again capacity is lost.

National minimum standards

The Care Standards Act 2000 will introduce a new inspection and registration regime bringing nursing and residential care homes within a single system. The National Care Standards Commission (NCSC) starts work in April 2002. Liberal Democrats (and the Tories) have supported this.

As part of the new regime the Department of Health produce national minimum standards for each type of care setting regulated by the NCSC. The national minimum standards care homes have caused great concern across the sector.

Although the staffing standard will not apply until 2005 and the room size standard will not come into effect until 2006 they have been the final straw for many owners who feel that the cost of compliance will not be recovered due to inadequate fee levels. For example, care homes will have to have lifts installed and will have to have minimum room sizes. Some very good care homes are set in Grade II listed buildings and will have to either move properties or undergo vast structural changes to the property in order for it to comply with standards.

There are three problems. The first is that the Government is not putting any money to one side to help meet the compliance costs of the standards. The second is that in order to raise the capital to pay for the remodelling of the home the owner has to be able to make a rate of return, but the remodelling will result in less rooms and as a result a reduced income from fees. Bank managers are unlikely to finance such investment. The third is that to get planning permission to make the alterations in some of these properties are nigh on impossible.

Retiring care homeowners

During the mid 1980s there was a massive expansion of the number of private care homes as the Conservative Government deregulated, and in effect, privatised the industry. As a result the supply of long-term care beds has been unplanned leading to an excess of supply in some areas and a growing deficit in others. However this is set to change over the next few years, as many of those Care Home owners are set to retire. They can either sell on their business against the backdrop described above or sell up realise the development value of their property and landholding.

Mr Burstow has put forward a four point plan to try and restore confidence in the sector and halt further home closures calling for:

• An urgent review of care home fee levels and their impact on the supply of places.
• An end to the postcode lottery on fees with national standards for setting fee levels linked to demand for care home places and the cost of compliance with new standards.
• An independent review of the compliance costs of new care standards and the impact on the quality of care; and
• All personal and nursing care to be free on the basis of need.