CMA calls for urgent action across the UK care home market

The Competition and Markets Authority (CMA) has called for urgent reform following its extensive review of whether the residential care homes sector is working well for people and their families.

A year-long market study found that the current system for providing care is not sustainable without additional funding, with the CMA’s financial analysis of the sector identifying a funding shortfall of £1bn a year across the UK.

The CMA launched its market study into care homes (residential and nursing homes for the over-65s) on 2 December 2016 and found that councils are paying fee rates for the residents they fund which are below the costs incurred by care homes. This has led to a situation where care homes have propped up their finances by charging higher prices to those who pay for their own care (self-funders).

On average, self-funders’ fees (£44,000 per year) are around 40% higher than those paid by councils, yet receive the same level of care.

The results also highlighted that beyond the current challenges faced, the sector needs to grow substantially as the population ages. However, uncertainty about future, including whether council fees will cover the full costs of care, means that there is not enough investment in the accommodation for council-funded residents.

CMA Chief Executive, Andrea Coscelli, commented: "Care homes provide a vital service to some of the most vulnerable people in our society. However, the simple truth is that the system cannot continue to provide the essential care people need with the current levels of funding.

"Without substantial reform to the way that councils plan and commission care, and greater confidence that the costs of providing care will be covered, the UK also won’t be able to meet the growing needs of its ageing population.”

The study also found that basic information and support needed for people choosing care homes was often unavailable to help individuals navigate the system and both residents and their families found it difficult to raise concerns or complaints.

Andrea continued: "It is essential that residents and their families can make informed choices, understand how these services will be paid for, and be confident they will be fairly treated and able to complain effectively if they have concerns. We are now calling on care homes, councils and government bodies to help people navigate what can be a confusing system.

Examples of the CMA’s concerns include where homes are not being clear enough upfront about their prices or terms and conditions, do not protect residents’ deposits effectively against the risk of insolvency, are not fair when asking a resident to leave or when they ban visitors.

"Of all people, it is especially important that care homes residents are treated fairly and have the full protections of consumer law. We will be taking steps to assist care homes in understanding their obligations, but we are also taking enforcement action now on some issues where we believe the law is being broken,” finished Andrea.

As a result, the CMA is taking direct action under consumer protection law and has also made a range of recommendations to government and others, including taking enforcement action and raising concerns with some care homes and better consumer protections for residents.

The CMA says it will continue to engage with governments, councils and the industry so that these recommendations can be used to inform future social care policies and consultations in England, Scotland, Wales and Northern Ireland.

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