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Care sector on brink of another collapse

'GMB warnings that Southern Cross would collapse were ignored again and again by government, history looks set to repeat itself'

11 November 2015

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A lack of state funding for residential care services will see care homes underfunded by £1.1bn in the next five years.

The government's unfunded commitment to the new national living wage will be responsible for one third of the gap (£382m), as care home operators will have to divert funds away from care services to meet the payroll demands of the living wage, research by the think-tank, ResPublica has revealed.

The effect of this will be a loss of 37,000 beds by 2020, which is 'greater in scale than the collapse of Southern Cross in 2011, which affected 31,000 older people'.

'When Southern Cross failed the private sector stepped in and cared for those left homeless. Now, however, with the sector losing money for every funded resident there is no provider of last resort.

'We fear the worst case scenario is the most likely, that these residents will flood our local general hospitals costing £3bn per year by 2020', commented Phillip Blond, director of ResPublica.

The £3bn sum raised by Blond refers to how much it will cost the NHS to accommodate 37,000 new residents - a sum that the study warns has not been taken into consideration by the government.

ResPublica worked in partnership with GMB, a general union, which voiced concerns about Southern Cross before its collapse in 2011.

Justin Brown, national officer for the GMB union, believes that history is slowing repeating itself.

'It is one minute to midnight for the care sector. Just as GMB warnings that Southern Cross would collapse were ignored again and again by government, history looks set to repeat itself unless George Osborne acts now. This time however we are not just talking about the largest care home provider collapsing, but the entire publicly funded care home and domiciliary care sectors.

'This is not some unexpected, overnight phenomenon catching everyone unawares, this has been a slow motion collapse and somebody's mum or dad or granny (our elderly and vulnerable) will be the biggest victims.'

He added: 'Local authorities are unable to act as 'lenders of last resort' and step in, so the NHS will be forced to try and fill the giant hole created by 37,000 less beds in the care sector for our elderly and vulnerable - equal to 28 per cent (or 1 in 4) of all available NHS beds. The effects will be immediate and crippling'.


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