Private providers have every reason to fight their corner
By Caring Times editor Geoff Hodgson
In recent months private care providers have warned that many care homes which rely heavily on state-funded residents will soon have to close because of inadequate fee levels in the face of rising costs, in particular the effect of the National Living Wage. Last week’s budget did nothing to address this so we can only wait and see if the predicted meltdown occurs to any degree.
The underfunding argument has recently been challenged by the Centre for Research on Socio-Cultural Change (CRESC) which has argued that the big corporate providers are driving the underfunding narrative in a bid to persuade government to underwrite their profit margins.
The CRESC report raises pertinent questions but I don’t think it paints the full picture. Past and current governments have encouraged the devolution of social care to private providers and have adopted a very laissez faire approach to the sector’s ongoing evolution.
Many smaller providers are struggling to keep their businesses viable and private care provision has to compete with other sectors for development sites in response to a growing demand for care home beds. They are given few concessions in the way of tax relief and they face stiff competition for skilled labour. Compliance with regulatory requirements are more onerous and costly than in many other sectors.
Banks have been bitten by failures in the sector and have become very coy, now only backing the safest of ventures. The sector has had, perforce, to seek other sources of development funding, including private equity institutions, other institutional investors and crowd funding. Lots of businesses in lots of sectors do this so where’s the problem? The problem is that when a social care business fails there is an unpalatable social cost lurking in the wings.
Only the most cynical of businesses plan to fail and social care providers have more reason than most to try to succeed. Because of this, I cannot bring myself to condemn them for vociferously fighting their corner, looking at every possibility of reducing their costs, and seeking to charge whatever they believe the market, public or private, will bear.
- The CT Blog is written in a personal capacity – comments and opinions expressed are not necessarily endorsed or supported by Caring Times.