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Press Release: The Care Collapse

10th November 2015

  • ResPublica

The NHS faces a £3 billion bill as residential care homes shut their doors forcing hospitals to care for the elderly, according to a report from the independent think tank ResPublica.
In The Care Collapse: The imminent crisis in residential care and its impact on the NHS ResPublica says within 5 years residential care homes could lose a staggering 37, 000 beds meaning the NHS would have to find extra billions to care for those patients who are no longer in care and can’t go elsewhere.
The authors say the looming crisis has echoes of the 2011 collapse of Britain’s largest care homes operator, Southern Cross Healthcare, which ran 750 care homes.
Director of ResPublica, Phillip Blond, said: “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 £3 billion per year by 2020.”
ResPublica predicts the National Living Wage, which will be brought in on 1st April 2016, will also cause significant financial harm to the residential care sector.
The report says by 2020/21 the residential care sector will need an extra £1.1 billion to meet demand. £382 million, or one third of this figure, will be for the rise in staff pay because of the National Living Wage.
Staff costs are estimated to be between 60-80% of the total cost of caring for a patient in a residential home.
Report author Emily Crawford said: “The National Living Wage is a great step forward. It is estimated it could help more than 6 million low paid workers. But for the care sector, which is heavily reliant on its labour force, it could be catastrophic.”
“By 2020/21 we predict that a third of the funding gap will be because of the rise in the cost of paying staff the National Living Wage.”
Mr Blond added: “The National Living Wage must be brought in. It is essential working people are paid a proper wage. At the same time it will damage the residential care sector which is already under extreme pressure and it could collapse as a result.”

In a detailed analysis authors outline a number of other significant factors in this crisis including:

  • An Ageing Population: Over 65s make up about 18% of the population. This is set to rise to 25% by 2050. Nearly 10% of the population is over 75 years old.
  • Acute Conditions: 70% of the total health and care spend, in England, is on long term conditions meaning 30% of the population accounts for 70% of the spend.
  • Spending Cuts: 90% of local authorities now only provide funding for older people with ‘substantial’ or ‘critical’ needs. The result of this has been that the number of over 65s getting public money for social care has fallen by 27%.

Report authors say a fundamental shift in the way residential care is commissioned and paid for is needed.
Backing the report Justin Bowden, National Officer for the GMB union, said: “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.
“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% (or 1 in 4) of all available NHS beds. The effects will be immediate and crippling.”
Dr Chai Patel, Executive Chairman HC One the UK’s third largest care provider, said: “Our care staff do an incredible job day-in day-out and deserve the Living Wage, but it must be properly funded. This report shows that unless the Chancellor takes urgent action to address this looming crisis, tens of thousands of older people will lose their homes and be forced into the NHS.
“Southern Cross was a failing company, what we are facing now is a failing system. At a time when the Baby Boom generation is beginning to retire, and look ahead to their long term care needs, there are huge fears that the homes to care for them simply won’t exist.
“We must protect the homes of vulnerable older people, and our NHS, by ensuring they are properly funded for the future.”
Notes to the Editor:
1) The Care Collapse: The imminent crisis in residential care and its impact on the NHS in an interim report. The full report will be published in January. It will outline solutions to the crisis facing residential care.
2) The report is written by Emily Crawford and Claire Read. Emily Crawford is a research associate at ResPublica. She has expertise in public services reform, with a particular focus on the transformation of commissioning and contracting and development of provider models. Claire Read is a professional writer and editor who has specialised in healthcare throughout her 15 year career. She is a regular contributor to Health Service Journal and (formerly E-Health Insider), with her work also appearing in publications including Nursing Times, Nursing Standard and Commissioning. Before launching a freelance career, Claire held staff roles at prominent organisations both inside and outside the NHS.
3) The ResPublica Trust is an independent non-partisan think tank. Through research, policy innovation and programmes, ResPublica seeks to establish a new economic, social and cultural settlement. In order to heal the long-term rifts in this country. ResPublica aims to combat the concentration of wealth and power by distributing ownership and agency to all, and by re-instilling culture and virtue across the economy and society.
4) The economic analysis in the report is done by Integrated Health Partners (IHP).
5) Southern Cross Healthcare was the UK’s largest provider of residential care with 750 homes, more than 37, 000 beds and over 40, 000 employs. But the company couldn’t afford to pay the rent and it collapsed in 2011 when landlords took over all of the care homes.
6) The average cost of an NHS bed per day in 2015 is £225. By 2020/21 this will rise to £235. Cutting 37, 000 beds is equivalent to 12,829,750 bed days. The cost of nearly 13 million bed days would be £3 billion. (Appendix 3).
7) The National Living Wage will be mandatory from April 2016.
8) Residential care providers look after 1 in 6 people aged over 65.
9) Long term conditions such as diabetes and dementia are more prevalent in older people. 58% of those aged over 60 have a long term condition.
To receive the report and arrange interviews with report authors and supporters please call Oruj Defoite on 07866685130 or email

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