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More care homes face closure

14th July 2011

Industry experts have warned that more care homes across the UK face closure.

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The warning from analysts Laing & Busson follow the break-up of the country’s biggest chain of care homes run by Southern Cross.

They say that with councils cutting or freezing their fees, more closures will be inevitable.

Laing & Buisson found that the majority of local authorities in England have either “frozen or reduced” the amount they pay residential care companies for looking after elderly or disabled adults.

For 2011/12, the fee uplift across Britain will be just 0.3%, which is the lowest to date and below what experts believe is needed to keep pace with cost inflation in the sector.

The figures mean that care home operators will effectively see a 2.5% fall in margins meaning they will either have to cut staff costs or close.

The firm’s chief executive, William Laing, said: “As the news of Southern Cross’s demise sinks in, the care home sector will have to think hard about its response to real terms cuts in local authority fees.

“Operators can ramp up legal challenges, but these are expensive and risk being reversed in the next fee setting round. They can lobby councils more intensively, but are likely to be given short shrift in the light of other valued local programmes being sacrificed. Or they could put renewed energy into lobbying central government.”

The 750 Southern Cross homes are now being taken over by groups of landlords following a breakdown in negotiations on Monday.

 

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