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"Hidden" tax on residents is propping up care sector

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Care home residents who finance their own care are propping up the cash-strapped sector, latest figures suggest.

A market analyst for the healthcare sector has calculated that the fees paid by the average resident are around £100 less than the actual cost of their care.

This suggests that those who pay the bills themselves, as opposed to getting funding from the local authority, are plugging an annual black hole of £1.3billion.

Analyst William Laing said that the care industry was under intense pressure, with the costs rising “inexorably” upward.

The introduction of the National Living Wage and the need to employ a greater number of carers to deal with increasingly complex needs are squeezing companies’ finances.

This means that they are increasingly reliant on the thousands of pounds paid by those financing their own care.

“The entire care home sector for older people is being kept afloat through cross subsidies from the 40 per cent of residents who pay privately,” said Mr Laing.

“We have conservatively estimated the shortfall in council paid care home fees at about £1.3billion a year in England alone.

“[This] can equally be viewed as a hidden ‘care tax’ that government and councils are content to see private payers contributing to keep mixed funding homes in business.”

George McNamara, the head of policy and public affairs at the Alzheimer’s Society, laid the blame at the door of politicians who had imposed “years of drastic cuts” to social care budgets.

With many homes now at breaking point, he claimed that some residents were being “ripped off” and being asked to pay more than the care actually cost

“With a growing funding gap between the NHS and social care and an ageing population, this problem is set to worsen,” he said. “The Government must act now and prioritise delivering a long term plan for social care.”