There is an urgent need for the government to step in and help solve the acute funding crisis that is eating away at the care sector, warns Top 40 accountants, Bishop Fleming.
Tim Godfrey, Partner and Head of the firm’s Care Home team, said he was “surprised and saddened” by the absence of any new funds or funding solutions in the recent Autumn Statement, despite rising care home costs, the ageing population and increased pressure on the NHS.
Although the Chancellor did not offer any new support, he did announce an increase in the National Living Wage from £7.20 to £7.50 next April, adding further financial strain on Care Home budgets. The Living Wage is eventually expected to rise to above £9 per hour by 2020.
Mr Godfrey said: “When Chancellor George Osborne introduced the Living Wage in April, he allowed local authorities to increase their council tax bills by 2% to assist care homes in meeting the increased cost. Now, the new Chancellor, Philip Hammond, has pushed up the Living Wage by a further 4.2%, but without any equivalent extra funding for the care sector to pay for it, which is really unfair.”
Mr Godfrey suggested that even the 2% rise had not been enough, and he doubted whether all cash-strapped councils had actually passed on all the money they had raised to social care, when there were competing priorities.
As well as wage costs, care homes also face rising food prices, heating and lighting costs, and other inflationary pressures. In many cases they are also struggling to finance their debts. There is an acceleration of care home closures due to the attrition taking place, the Bishop Fleming partner revealed.
Mr Godfrey advised that in the absence of further funds, care home owners needed to ensure their survival through increased efficiencies and by carefully monitoring their finances.
He commented: “A care home run on sound business principles with good business management can survive and prosper in the face of squeezed financial margins. Knowing where you are and what resources you have at your disposal can help you weather the storm.”
Mr Godfrey added: “It is now even more important to use a specialist adviser who will provide real-time financial data, regular management accounts and benchmarking reports which can give business owners the greatest chance of success.”
The partner commented that with more care homes closing, the state of social care in the country increasingly depended on a care sector that was financially aware and management fit.
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