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Fair Cost of Care Analysis

CARE England, the largest and most diverse representative body for independent care providers of adult social care in England, has identified that Local Authorities in England were underfunding older people's residential and nursing care homes by over £2bn per annum during 2021/22 which does not account for inflation, which peaked at over 11% in 2022 and is projected to exceed 7% for 2023-24 according to the ONS.

These findings follow an analysis of the average fee rates currently paid by Local Authorities across England and the reported Fair Cost of Care rates published on 1 February 2023 in their Annex B submissions to the Department of Health and Social Care. The Fair Cost of Care was a Government-led exercise designed to achieve a shared understanding of the local cost of providing care.

Across all Local Authorities and just over 178,000 Local Authority funded residents in England, as at April 2022, the average difference between what a Local Authority pays for residential care fees and the Fair Cost of Care was £218 per week, whilst this figure increases to £231 per week for nursing care.

Care England's analysis identified Regions of concern which were significantly underfunding care according to their Fair Cost of Care calculations. In the North East Region, consisting of 12 Local Authorities, providing care to over 14,000 Local Authority care home residents, a Local Authority would be required to uplift average fees paid in 2021-22 for residential care by over 18% and 24% for nursing to meet the Fair Cost of Care at a cost of over £100m per annum across the 12 authorities. In the more affluent South East, consisting of 19 Local Authorities, and provides care to over 30,000 Local Authority funded care home residents, the average uplift for residential would need to be over 32% and 25% for nursing to address the gap between the average fee paid and the Fair Cost of Care at a cost during 2021-22 totalling a gap of over £400m per annum.

Of particular significance, 10 of the largest Local Authorities by residents funded were significantly underfunding care and would require on average, an uplift of 31% for residential and 27% for nursing funded residents to meet the Fair Cost of Care resulting in a gap of over £500m per annum.

4 Local Authorities, Dorset, Newcastle upon Tyne, Reading, and St. Helens, reported the Fair Cost of Care rate below the average fee rate they paid to care homes which throws questions on the accuracy of their Fair Cost of Care calculations or average fee data reported.

The Government's ambition of establishing a Fair Cost for Care was primarily to address Local Authorities paying provider fees that do not adequately cover the actual cost of providing care.

Professor Martin Green OBE, Chief Executive of Care England, says:- "The evidence is clear. The care sector is being significantly underfunded by local authorities and requires significant investment by central Government. The continued funding shortage needs to be tackled head-on. Whilst the Government has injected £7.5bn into social care over the next 2 years, this is aimed at creating an additional 200,000 new care packages and supporting the early discharge of people from Hospital to ease the NHS backlog, whilst also being split between adult and child services which are also critically underfunded by central Government. Our analysis indicates that the £7.5bn will not scratch the surface in tackling the inherent issue of Local Authorities underfunding care packages and the rising gap between fees paid and the cost of care caused by inflation. The inability of many local authorities to pay the actual cost of care has resulted in the cross-subsidisation of the state by individuals who self-fund their care. Care staff pay is directly impacted by fees paid for care by Local Authorities and those who self-fund and, as such, providers who rely more heavily on Local Authority funded residents are more restricted in their ability to increase rates of pay without being financially constrained, which has a direct correlation to the recruitment and retention issues experienced by the sector. The core purpose of the Fair Cost of Exercise, an initiative led by the Government, was aimed at increasing the care fees paid by Local Authorities to ensure the care sector's sustainability. This reality must now be realised."

Almost 60,000 homes sold through Right to Buy will not be replaced by 2030

ENGLAND'S already stretched social housing stock is predicted to lose a further 57,000 homes through the Right to Buy (RTB) scheme by the end of the decade as Councils struggle to replace sold properties, new analysis published by the Local Government Association reveals.

A new report by Savills, commissioned by the LGA, Association of Retained Council Housing (ARCH) and National Federation of ALMOs, estimates that 100,000 homes are likely to be sold through the RTB scheme by 2030, with just 43,000 replaced as significant discounts leave Councils without funding to replace the much needed homes on a like for like basis.

The analysis warns that there will be no Region of the country or Local Authority with the capability to provide 1 for 1 replacements of homes sold under RTB over this period.

The size of the discounts available were increased in April 2012, and as a result the average discount has increased by 150 per cent to nearly £68,000 in 2021/22. At the same time, this has led to a quadrupling in the number of RTB Sales.

With RTB discounts set to increase by a further 10.1% from April this year, in line with September's rate of inflation, the LGA says it will become even harder for Councils to deliver replacements.

The LGA is urging the Government to use the Spring Budget to allow Councils to set discounts locally and retain 100 per cent of sales receipts to avoid such a loss of desperately needed social housing stock.

Councils also need to be able to combine RTB receipts with Government grant funding, such as the Affordable Homes Programme, and transfer funding from sales to ALMOs or housing companies to give them greater flexibility over how new Council housing is delivered.

Cllr David Renard, housing spokesperson for the LGA, said:- "Councils want to urgently help people on Council housing waiting lists and stuck in temporary accommodation. It is becoming impossible for Councils to replace homes as quickly as they're being sold as they are being left with nowhere near enough money to provide replacements. Rising RTB discounts mean that 1 household's home ownership is increasingly being prioritised over another's access to secure, safe, social housing. RTB can enable families to get on the housing ladder and own their own home, but every home sold that isn't replaced risks pushing more families into the private rented sector, driving up housing benefit spending and rents, along with exacerbating our homelessness crisis. Our new analysis shows RTB will quickly become a thing of the past in England if Councils continue to be prevented from replacing sold homes. Councils urgently need the funding and powers to replace any homes sold under RTB quickly and reinvest in building more of the genuine affordable homes our communities desperately need."

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