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11 Nov 2020

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Double standards in care home funding?

By guest blogger BOB FERGUSON

So Care England has discovered disparities between the prices local authorities pay independent sector providers and what it describes as “fees paid to state-run homes”.

To my certain knowledge, this type of sore has been running since the community care reforms were introduced in the early 1990s. Down the years, outraged home owners seeking an explanation for the imbalance were told the comparison they had drawn – in fact, between council prices paid to the independent sector and the authority’s “standard charges” for in-house provision – was not one of like with like; the two sums had been compiled for completely different purposes using different accounting systems.

Local authorities are required to set standard charges for their services – including residential care, where it is provided directly. Standard charges are calculated for each service according to a methodology (prescribed by CIPFA, the Chartered Institute of Public Finance and Accountancy), some elements of which bear little apparent relevance to the delivery of care. These charges are levied predominantly, if not exclusively, in respect of placements by other authorities; they are essentially the currency of inter-authority transactions.

I suspect much the same state of affairs still prevails. I would also be surprised – nay, horrified – if Care England was unaware of the situation. Basic knowledge apart, they worked cheek by jowl with CIPFA on the detailed guidance for social care commissioners, published in 2017. It is difficult to believe that CIPFA’s involvement in standard charges would not have become apparent during the consultation process.

Perhaps it’s my age, but I found the “analysis” as set out in Care England’s press release to be pretty much incoherent. There was no clarity on the model(s) of provision from which the figures supplied by the respondent councils had been produced. This stuff is important. For example, by “fees paid to state-run homes” do they mean that the councils in question have an arm’s length arrangement to “purchase” in-house residential care, in the same way they do from the independent sector? On the other hand, might these “fees” represent contractual payments from councils that have transferred their care home stock to, say, a not-for-profit organisation? Or have the analysts confused the figures with standard charges (as detailed above)? Alternatively, were councils asked to supply – or did they actually supply – their estimation of unit costs for in-house provision, which in the conventional way receives guaranteed funding each year out of the base budget? So many questions; so few answers.

If the figures provided – even some of them – were those of standard charges, shouldn’t Care England have been more honest and clarified their true status instead of implying an equivalence to the prices paid for commissioned residential care? When pointing the finger at preferential treatment for direct provision, they really should have published solid supporting evidence in transparently like-with-like comparisons – apples with apples; not apples with pears. I know that rooting out answers would not have been easy. Some years ago, a county association with which I worked sought the assistance of the local university’s business school to shine a light on the way council finances (from all sources) were managed to support their own provision and commission care from the independent sector. His response was short, if not particularly sweet: don’t bother. According to this guy, it would have cost a small fortune (in fees set by the university) to extract any meaningful data, with the likelihood being that it would probably serve no useful purpose.

To be clear, today’s prices for publicly funded residential care are unfeasibly low. That much is not in dispute. My impression is that, in the great scheme of things, most care home operators regard disparities between public and private prices as little more than an irritant and would much prefer the emphasis of representation to be placed on baking in the principle that council prices must accurately reflect providers’ costs. I can’t fathom why Care England should have taken so much trouble to gather information in order to make what appears to be, at bottom, an invalid comparison – and yesterday’s news at that.

  • The CT Blog is written in a personal capacity – comments and opinions expressed are not necessarily endorsed or supported by Caring Times.

3 Replies to “Double standards in care home funding?”

  1. But surely, the comparison being made is between the fee levels paid to different providers for essentially the same services – the Byzantine commissioning practices of some local authorities are quite beside the point. And surely, Care England is quite properly representing the interests of its members in repeatedly challenging such discriminatory practices while they continue to operate.

  2. If care homes are accepting local authority care fees, it is perfect evidence that they are happy with the level of those fees.

  3. Geoff, the major problem is that the press release does not make explicit what it means by “fees paid to state-run homes”. What these “fees” actually are could explain why they are at the levels quoted; obviously, it won’t necessarily justify them. For example, if some – or all – of the figures quoted are in fact “standard charges”, as I’ve explained, councils have no option but to set them following the CIPFA formula.

    There may well have been valuable information elicited in the Care England survey. We will never know. Had their press release been more effectively drafted – making clear the bases of the comparisons made and summarising their conclusions – we would all have been better for it. There would have been no need for second guessing.

    But I’m sure Professor Green will be grateful that you should have rushed to the defence of his organisation.

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