Britain’s care sector is plunging deeper into crisis as more evidence emerges of homes applying spiralling, opaque fees to those residents who pay for their own care.
It comes as Theresa May’s controversial proposals to reform care funding, announced in the Conservative manifesto and then seemingly largely abandoned, are in disarray.
Several care homes are now under investigation by the Competition & Markets Authority (CMA) over allegations that they may have broken the law. The watchdog raised concerns about fees levied after residents have died and questionable upfront fees, both of which may breach the Consumer Rights Act, it said.
The investigation was sparked as part of a review of the care sector, with these damning interim findings emerging last week. It also found that people struggled to find and compare care homes and faced difficulties in complaining about poor service.
Telegraph Money has repeatedly highlighted how the funding system, which effectively sees self-paying patients subsidise council-funded residents, is failing.
Now experts warn that the funding model is on the “verge of implosion” as care homes battle rising costs while councils continue to set strict limits on the fees they are prepared to pay.
The Conservatives’ failure to secure a majority has kicked reform further down the road. Radical reform of long-term care funding was a flagship promise in the Tory manifesto but was quickly watered down after opinion polls swung towards Labour.
The so-called “dementia tax” has been identified as a major reason for Theresa May’s failure to a majority. Under the plan, councils would have started to pick up the tab for care costs once a person’s assets fell below £100,000, as opposed to the current level of £23,250 in England.
But, crucially, family homes would also be included in the means-testing formula for “at home” care for the first time. At the same time, the plan for a lifetime cap – which would have helped those who needed long periods of care – was dropped. The Tories quickly backtracked over the latter, which Labour called the “dementia tax”, and confirmed that there would be an overall cap after all, as promised in its 2015 manifesto.
Homes increase fees ‘by as much as they want’
Part of the CMA’s investigation focuses on the terms of contracts that families enter into when family members enter a care home. The watchdog is concerned that homes may be breaking the law by charging large upfront fees when it’s not clear what services they relate to.
The inquiry is also looking at cases where care homes continue to collect fees after the person in care has died. In some instances homes are filling beds still being paid for by other families, it is alleged.
But Ray Hart of Valuing Care, a consultancy that negotiates fees on behalf of councils and individuals, said the bigger issue was homes’ ability to raise charges by as much as they like.
He said: “The biggest problem is the fact that homes have the ability to increase fees by what they call ‘reasonable costs’ no matter what.
“There are cost pressure on them of course but basically these are open-ended contracts and each year they can raise the cost by as much as they like and they don’t give breakdowns explaining the increases.”
Average weekly self-funded fees for residential care homes with nursing care are now more than £1,000 for the first time, a report by analyst LaingBuisson found last month. The figure is £700 a week for self-payers in homes without nursing care and just £486 for state-funded residents.
Care homes in parts of the country where there are fewer self-funders, such as northern England, are under most pressure, said Mr Hart. “The market is more stretched than at any point in my 20 years of working in the care industry, especially where there are no self-funders,” he said.
“Eventually providers will say they’ve had enough.”
Self-funding residents are seeing fees increase at a far faster rate (between 5pc and 10pc a year) than those funded by the state, where inflation is around 4pc, he added.
In one example that Telegraph Money has previously reported, Ian Parkins was left wondering how to make up the shortfall in meeting his father Tony’s care costs, which had risen by £150 a week since he entered his home in 2014. Fees at Mr Parkins’s care home in Essex, run by national chain Hallmark, started at £1,047.
By last year the bills had risen to £1,193 – an increase of 13.9pc in two years.
In another stark example, 94-year-old Eunice Edmondson saw the fees charged by her care home increase three times as fast as inflation. She went into a nursing home in December 2001 paying just over £30,000 a year.
But by 2014 the annual amount charged by the home, in Upminster, east London, had reached £69,000. The 129pc increase far outstripped the rising cost of living over the same period, at just 40pc.
Mrs Edmonson’s nephew, David, estimated that she would have paid more than £600,000 since she entered the home.
Of course, the length of Mrs Edmonson’s stay in a care home is not typical but it highlights how vulnerable individuals and families are in a system that currently has potentially limitless costs.
Andrea Coscelli, acting chief executive of the CMA, said: “Demand for care home places is expected to surge over the next two decades. To make sure the additional capacity this requires is available, it needs to be built in good time. At present, short-term funding pressures and uncertainty mean that the sector is not attracting investment.”
The watchdog’s final report and recommendations are expected to be published in November.