Elderly Care Fees 2011/12

Despite the significant fears held by many care providers in the wake of the coalition spending review, local authorities across England have, on the whole, sought to avoid reducing fees paid for elderly care. Research carried out by specialist healthcare consultants HPC shows that the local authority fee reviews throughout the country have resulted in an average uplift of 0.06% effective from April for the calendar year 2011/2012.

HPC researchers contacted all 152 English local authorities in order to ascertain fee movement effective from April 2011. Comparing base elderly residential care fees with those paid in the previous year 2010/2011 the research concluded that fee reviews did not reflect the concerns held by many in the sector during preceding months. Whilst fee awards admittedly varied greatly (from 6.5% uplift to 9.5% reduction) the vast majority of councils maintained the fee levels set in April 2010.

With 134 councils responding, this represents an 88% return. A number of local authorities (ten respondents) are continuing to discuss fee proposals either internally or with providers whilst another four councils confirmed that fees for the forthcoming year will be paid subject to individual provider agreement and service user assessment rather than by reference to fixed fee scale.

Following modest average increases in 2009/2010 and 2010/2011 throughout the country (2.2% and 0.5% respectively), the minimal uplift of 0.06% for the current financial year will be seen by many in the industry as positive news in the face of the wider economic picture. Of the 120 councils with confirmed intentions, 24 propose to raise fee levels, 12 are implementing a reduced fee basis whilst a substantial 70% of local authorities are maintaining fee levels introduced in April 2010.

The most significant reduction confirmed at the point of press is the 9.5% fee reduction being implemented on the Wirral. Other reductions are far less significant but include the 4% reduction being paid by Lancashire County Council for new placements and the 3.9% reduction being offered in Suffolk. On a more positive note, Bromley have provided the most significant confirmed fee increase (6.5%) with all other increases being between 0.0% and 3.0%. Key figures in respect of the 120 confirmed local authority fee rates are as follows:

Review range -9.5% to 6.5%
Review mean 0.06%
Review median -1.50%
Review mode 0.00%

This latest HPC research is broadly in line with the results of a recent survey carried out by the Association of Directors of Adult Social Services (ADASS) published in May. Although confirming the intention of English councils to reduce spending on Adult Social Care by £991 million in the current financial year, ADASS stressed the commitment to maintaining fee levels in order to protect quality of care. With the vast majority of savings anticipated to be made through improved efficiency and additional income, local authorities expect that service reductions will provide 23% of the aforementioned planned savings. Continued closure and transfer of in-house residential facilities will undoubtedly reduce the costs of care provision and attract much needed additional income.

Whilst many care home operators will have breathed a sigh of relief following the recent fee reviews in respect of elderly care, the medium term continues to be cause for concern. A nominal average fee uplift this year, coupled with falling average occupancy across the country, will continue to threaten the future of many care home operators in the face of a Consumer Price Index running at 4.5% (April 2011) and a minimum wage increase in October 2011 of 2.5%. With stagnant fees and rising costs likely to be the pattern for the next two or three years, there are choppy waters ahead for those operators heavily reliant upon local authority funded clients - as Southern Cross will testify.

Nigel Newton Taylor BSc (Hons) MRICS
Director

June 2011