MPs raise concerns over care sector’s finances

Neither Whitehall nor local authorities are monitoring the financial health of care providers, and some companies are racking up huge debts, according to the Public Accounts Committee.

The abrupt collapse of Southern Cross, Britain’s biggest care homes operator, over the summer caused turmoil for more than 30,000 elderly and vulnerable people.

The firm was crippled by having to pay a £250m rent bill as councils sought to cut fees in the wake of the first credit crunch.

However, the PAC’s report said effective oversight of the market was still not in place.

There is no early warning system for when providers are getting into difficulty, and no apparent plan for what happens if they fail.

At the same time, care homes are facing rises in costs and reductions in what local authorities will pay for places.

Currently 63 per cent of funding for homes comes from the public purse.

“Reducing this funding could destabilise the market or create problems for the NHS with elderly people blocking beds as local authorities no longer fund the social care places,” the cross-party committee cautioned.

Chairman Margaret Hodge said: “The Department of Health must get to grip with the very real risks to the social care market, if we are to avoid another Southern Cross.

“No one, government or local authorities, really knows what is going on locally or whether one provider is becoming too dominant.

“Effective oversight of the care market, including market share of large providers at the local and regional level, is essential to protect social care users and taxpayers.”

Mrs Hodge went on: “Local authority budgets are shrinking and large-scale providers are racking up debt – Four Seasons Health Care, for instance, carries nearly £1bn of debt – yet the department is not monitoring their financial health.

“It is deeply worrying that the department has not made clear what will happen when providers fail.

“This is crucial to protect frail and vulnerable users of care and to provide reassurance that the responsibilities of the failed providers will be transferred quickly and with minimum disruption to users.”

The MPs also said people were not getting enough support to use personal care budgets properly, with many confused about what the money can be spent on.

“There are wide variations in the information provided by local authorities,” Mrs Hodge said. “People should not be subject to a postcode lottery when deciding on their care. This is important for taxpayers as well as users.”

The general secretary of the Unison union, Dave Prentis, said it had long warned about the huge dangers in the care sector, which needed a radical shake-up to protect elderly people and the people working to care for them.