ONE in six care homes is at risk of financial meltdown and contracts could be handed back to councils as a result, according to a study published yesterday.
A persistent lack of money from local authorities, coupled with an increase in the minimum wage, had put considerable financial pressure on the sector, accountancy firm Moore Stephens claims.
The growing use of agency workers has pushed up staff costs to an all-time high, said the report.
Private companies that are unable to continue profiting from the care industry could “hand back contracts to local authorities,” partner Lee Causer said.
“Due to the ageing population, extra staff are needed at care homes in order to keep up with the demand, but many care homes just don’t have the budget for extra staff,” he said.
“This has made it increasingly difficult for care home companies to offer a high standard of care while remaining solvent.
“Concerns have also been raised that private care home providers unable to make a profit will hand back contracts to local authorities.”
Shadow social care minister Barbara Keeley said Tory ministers have ignored repeated warnings over the crisis in the care sector.
She said: “Directors of adult social services have recently warned that increased costs and demand will mean 8 per cent further cuts to care budgets this year, adding to the fragility of the care sector.
“This is serious, given that failures within care providers have affected two out of three councils in the last six months.
“It is time Health Secretary Jeremy Hunt finally woke up to this deepening crisis in care and the Chancellor committed to the £1 billion of extra funding needed to stabilise the care sector and fund a decent living wage for care staff.”