Older people forced to pay for “free” residential care

New research shows over a quarter of older people who qualify for free residential care, funded by their local authority, are now forced to turn to friends and family to find additional top up money to stay in their care home.

According to care home analysts Laing & Buisson[i], the number of local authority funded older care home residents paying top up fees has risen to 56,000 in the year 2012-2013. This amounts to 28 per cent of the 199,000 local authority funded older care home residents in the UK.

In most English local authorities a care home resident would only qualify for full council funding if their needs have been assessed as being substantial or critical[ii] and they have assets which do not exceed £14,250. 

Subsidised care funding is available for those residents with assets of between £14,250 and £23,500.  The issue of top up fees therefore affects the poorest and most vulnerable older people.

Top up fees[iii] are only supposed to be paid by family and friends when a resident has chosen a home that costs more than the fee that the local authority usually agrees to pay in respect to a person with similarly assessed needs.

In reality however,  Age UK hears from its advice line that in practice people are all too often given no choice but to pay a top up as there are simply no suitable places available at the local authority's agreed baseline fee rate.

In extreme situations there is evidence that certain local authorities have acted unlawfully. In some instances councils have set a baseline fee which is too low to pay any residential home fees in the area - leaving older people and their families with no alternative but to pay top up fees.

For example in September 2012, the Local Government Ombudsman ordered Southampton Council[iv] to pay compensation to a family of a care home resident who was wrongly charged top up fees, because there was no residential home place available to match the local authority base line fee rate.

There is little sign of relief for families on the horizon. Since 2010 local authority funding for social care has fallen in real terms, with local authorities further restricting access to care and the amount they are willing to pay for a care home place. And while Government has committed to implementing a cap on care cost, this may not provide older people with the security they need if contributions towards the cap are calculated on a deeply unrealistic ‘usual rate'.

Michelle Mitchell, Age UK Charity Director General said, "The underfunding of social care is having a disastrous impact on frail older people and their families.  A toxic mix of long term chronic underfunding and more recent austerity cuts to social care budgets is resulting in local authorities stretching their budgets and paying unfeasibly low fee levels to care homes.  This in turn undermines the residential care sector, forcing homes to cut costs.

"As a result more and more families whose older relatives are on a low income  are finding that there is no other alternative but to supplement  inadequate local authority funding with sky high top up fees.

"This crisis in the funding of social care is rippling through generations and the wider economy, forcing hard pressed families into traumatic choices, pitting the quality of care provision against the burden of shouldering top up fees.

"There is a moral imperative on local authorities to pay providers a realistic rate that does not threaten the long term survival of residential homes or force them to cut corners and lower the quality of care.

"But above all, Age UK urges the Government to acknowledge and act upon the gaping hole in social care funding in England, which is jeopardising the quality of care for the country's most vulnerable and poorest pensioners. These problems are a direct result of there simply being insufficient money in the social care system. As local authority spending on social care for older people continues to fall, the gap in social care funding grows.[v]  Councils are either freezing or only minimally uprating their baseline fee rates and consequently failing to meet the true cost of care home places."

According to data from Laing & Buisson the average uplift in baseline fee rates for older people set by UK local authorities was just 1.6 per cent, which is significantly below the uplift of 2.5 per cent that Laing & Buisson estimates is needed in 2012/13 to keep pace with care home cost inflation.

If local authority baseline fees fail to match the costs of the specific care home in which the self-funder has been living, families and friends are then required to fund the difference.

It is estimated by the LGiU that 25% of originally self-funding residents will come to rely on local authority funding after exhausting their savings and assets on their care fees and falling below the means tested threshold.[vi]

According to Laing & Buisson, on average English councils are paying £480 per week for residential care in 2012/13, approximately £50-£140 less than the ‘fair market range' price of £528-£623.

The ‘fair market range' is calculated using the Laing & Buisson approved method of estimating the regional and national pricing for residential care, incorporating property prices, staffing, training, overheads and return on investment in order to arrive at a fair market cost for care fees .[vii]

Age UK also warns that inadequate local authority baseline fee levels will have serious consequence for self-funding residents. At the moment many self-funders have to pay higher rates and are in effect subsidising residents funded by the local authority.  In the longer term, the rate paid by a local authority will determine the calculation for care costs under the Government's 2016 proposals for a £75,000 cap on lifetime care costs.  If the baseline rates remain well below the inflationary rate, self-funders will find that the ‘care cost meter' will underestimate care costs, making it a longer process for care home residents to reach the £75,000 threshold so the cap will help fewer people than previously thought

This is the third year in succession in which baseline fee rates have been outstripped by care home costs, amounting to an accumulative 4.8 per cent drop over the last three years since the Coalition Government first came to power.

Age UK believes that such underfunding, if allowed to continue, will have two detrimental effects.   Within individual care homes, providers will be forced cut costs, which could impact on the investment in staffing levels and training that is vital to maintain quality of care. Secondly the consequences for the wider care home sector are likely to be serious increasingly threatening the financial stability and even the viability of the care home sector.

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Notes to editors

Age UK

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