Care Homes: England — [Mrs Anne Main in the Chair]

Part of the debate – in Westminster Hall at 3:35 pm on 13th January 2016.

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Photo of Barbara Keeley Barbara Keeley Shadow Minister (Health) 3:35 pm, 13th January 2016

It is a pleasure to speak in a debate with you as the Chair, Mrs Main. I think it is the first time for me, although others have a different experience. I congratulate my hon. Friend Peter Kyle on securing this important debate. As well as his speech, there have been speeches and interventions from my right hon. Friend Joan Ryan, my hon. Friends the Members for Dewsbury (Paula Sherriff), for Rochdale (Simon Danczuk), for York Central (Rachael Maskell) and for Redcar (Anna Turley), the hon. Members for Newton Abbot (Anne Marie Morris) and for Bexhill and Battle (Huw Merriman), and the SNP spokesman, Patricia Gibson.

The care home sector in England is in crisis. A toxic combination of a chronic lack of funding plus rising demand and increased costs means that care providers are facing an extremely difficult time. I will go on to say more but we heard a great deal about that during the debate. The social care settlement announced in the autumn statement does little to provide the additional resources that the care home sector needs. As I said in Health questions last week, the Government’s funding proposals for social care are risky, uncertain and late. They are risky because the better care funding is back-loaded. It does not reach £1.5 billion until 2019. Indeed, it offers nothing this year and only £100 million next year.

Funding from the social care precept is uncertain. It can only raise £1.6 billion if every single council decides to raise council tax by the maximum amount and that is by no means certain. Only about half of councils chose to increase council tax this year. Despite social care pressures, it is unlikely that all councils will want to implement an unpopular tax increase at this time. Both sources combined are late, because they do not help this year and they only reach £3.5 billion in 2019-20. Council leaders—including, I think, a council leader in Essex—wrote to the Prime Minister asking him to move some of the funding forward.

In a joint review of the spending review undertaken by the King’s Fund, the Health Foundation and the Nuffield Trust, the total funding gap for social care is found to be between £2.8 billion and £3.5 billion by the end of this Parliament. We need to make it a goal to close that gap. The three organisations conclude:

“Public spending on social care as a proportion of GDP will fall back to around 0.9 per cent by 2019/20, despite the ageing population and rising demand for services. This will leave thousands more older and disabled people without access to services.”

I suspect that it is probably hundreds of thousands, not just thousands.

The plans for the social care precept are seen as unfair due to the wide variations in the revenue that local councils can raise from their council tax base. Deprived areas can have the highest need for publicly-funded social care, yet councils in those areas are less able to raise significant additional revenue from council tax.

Let me give the example of my local authority in Salford. The adult social care budget is now £61 million. It has had to be cut by £15 million since 2010 due to cuts in the central Government grant, and 2% of our council tax—the maximum we could raise if everyone paid and, of course, they do not—is £1.6 million a year so that does not close the gap. Ministers have failed to explain how the social care precept can be implemented in a fair way that addresses the differences in need across the country. That is important.

The care sector responded to the spending review by saying:

“We believe the package put forward for social care will not enable us to fill the current gap in funding, cover additional costs associated with the introduction of the National Living Wage, nor fully meet…growth in demand due to our ageing population… the settlement is not sufficient, not targeted at the right geographies and will not come soon enough to resolve the care funding crisis.”

That is absolutely clear, and it is the sector itself saying that.

The social care funding crisis is most apparent in the care homes sector. In his opening speech, my hon. Friend the Member for Hove gave a useful analysis of the differences between large and small providers, but I will focus on what could happen with the biggest care home operator. Four Seasons owns some 470 homes and cares for 20,000 residents, mainly older people. It has been reported that, in the third quarter of 2015, Four Seasons lost more than £25 million before tax, and the rating agency Standard & Poor’s has warned that Four Seasons could run out of money in as little as six months. Squeezed local authority fees and the cost of temporary nursing staff are cited by the company as the reason for its financial difficulty, and we know from this debate that those pressures are only going to rise.

The so-called national living wage will be introduced in April 2016, and we have just heard the views of the hon. Member for North Ayrshire and Arran, the Scottish National party spokesperson, on that. Perhaps the key thing, whatever we think of the level of the national living wage, and it probably is not enough, is that the Government have so far provided no assistance to help care home providers or local authorities to address the increasing costs caused by their own policy, welcome though it is, because increasing the pay of staff working in the care sector is vital—I think we all agree on that.

Before the spending review, a sector-wide group of charities, organisations and providers wrote to the Chancellor expressing concerns about the funding gap in social care. They said that a £2.9 billion social care funding gap would have these results:

“Up to 50% of the care home market will become financially unviable and care homes will start to close their doors. 74% of homecare providers who work with local councils, have said that they will have to reduce the amount of publicly-funded care they provide.”

Care homes are already finding it difficult to provide quality care, as we have heard. The CQC’s 2015 report recognised that, of course, adult social care providers face challenging times, but it raised concerns, as my hon. Friend the Member for Hove did, that nursing homes provide a poorer quality of care than other adult social care services. Indeed, just under half of nursing homes rated up to 31 May 2015 were rated good or outstanding, and one in 10 were rated inadequate. That trend is likely to continue unless the funding gap is addressed.

We have heard about the ResPublica report released in November, which projected a funding gap of more than £1 billion for older people’s residential care alone by 2020-21. My hon. Friend referred to that, and it could result in a loss of some 37,000 beds, which would be greater in scale than the collapse of Southern Cross. A loss of beds on that scale would have significant costs for individuals, families and the NHS. If all the residents of lost beds in care homes included in the report were to flow through to hospitals, the annual cost to the NHS is put by the report at £3 billion.

There has been excellent coverage in this debate of the postcode lottery that exists in certain regions of the UK. Of course, care homes in certain regions are much more likely to be subject to significant financial pressures. A market insight report by LaingBuisson found that the proportion of self-funders varies dramatically between regions, and we have already heard some examples. In 2014, in the north-west, only 18% of residents were self-funders, compared with 54% of residents in the south-east. That contrast has already been drawn out by my hon. Friends. Those differences have significant implications for the financial viability of care homes in regions with higher levels of local authority-funded residents.

It is no surprise that the Government’s policies have failed to attract investment in state-funded social care, and it has not happened on its own; but many providers have been forced to attract private funders to maintain their profitability, and LaingBuisson concluded:

“Prospective new care home developments for state-funded clientele…struggle to meet investment criteria because of inadequate fee levels on offer from local authorities in most areas of the country”.

That is a serious point.

The hon. Member for Bexhill and Battle raised the issue of migrants working in nursing in the care sector, but there is a further issue with recruitment to which my hon. Friend the Member for York Central referred. Independent Age and the International Longevity Centre produced a report called “Moved to Care,” which raised that issue:

“Migrants and particularly non-EU migrants play a big role in the care workforce. Nearly 1 in…5 care workers was born outside of the UK”.

The report states that one in seven care workers—more than 191,000 people—is a non-EU migrant. The care sector has a vacancy rate of nearly 5%. That is the recruitment problem that my hon. Friend the Member for Hove talked about. Given those statistics, the serious thing is that care workers do not appear on the shortage occupation list, so a fall in net migration could have a serious impact on the care sector. As the hon. Member for Bexhill and Battle asked—this is in addition to what I was going to ask today—would it be viable for skilled care workers, including senior care workers, to be included on the tier 2 shortage occupation list, as are nurses?

Good quality, affordable care in old age is a basic right, but the current pressures that care providers and local authorities face mean that there is a risk that good care will become the preserve of the wealthy. Julia Unwin, the chief executive of the Joseph Rowntree Foundation, has said that the effects of reduced home care capacity would be “devastating.” She said that,

“care homes are already under financial pressure.”

We have heard ample examples of that. She continued,

“if proper funding is not provided…with these additional costs, the Government risks creating a two-tier care home system where good care is only available to those who can pay for it.”

Ministers must do more to ensure that the most vulnerable people in our society start to receive the good-quality care that they need.

A sustainable financial settlement is needed, but the Government’s policies are ineffective and are failing to take account of differing needs across the country. We had an opportunity for a settlement with the Dilnot reforms, but chronic underfunding has led to long delays in implementation. Will the Minister reiterate his support for the implementation of the Dilnot reforms? After all, page 65 of the Conservative manifesto—that was not very long ago—stated that that is what the party would do.

Whatever we do about the cap on care costs, we must first address the deepening funding crisis. A first step would be for the Government to admit that the plans announced in the spending review do not address the funding crisis that has been so amply referred to in this debate. What steps will be taken to protect services from collapse? That is the priority. Without a radical change in policy, care homes will be unable to offer the services needed to ensure what almost everybody in this room would want—that every older person has the care they need and the dignity and respect that they deserve.