FT reporter, Gill Plimmer writes that the UK’s care home industry is “on the brink of collapse” with companies either going bankrupt or pulling out of contracts.  This is the conclusion of a joint report published by the Local Government Information Unit and one of the largest providers, Mears.  Mears says it loses £3m a year on its home care business and is handing back unprofitable local authority contracts and will be careful about bidding for any more.

The industry has been hit by cuts to local authority budgets and the fees they pay, rises in the minimum wage, a shortage of trained nurses and tougher immigration rules.

The funding crisis is also causing problems in hospitals, with elderly patients continuing to block beds because whilst fit to be discharged there is no social care package in place to look after them when they return to their homes.

The industry is still dominated by smaller companies with an average net worth of just £314,000 according to research by Opus for the BBC Panorama programme. It found that businesses, which provide care for the elderly in their homes are losing an average of £11.66 per person per year.  The research by Opus also revealed that out of 2,581 UK care companies, a quarter were at risk of insolvency and 69 had shut in the past three months.

Nick Hood, Business Risk Adviser at Opus called for extra state funding for elderly care:

“Far too many providers are at risk of failure and there is little incentive to stay in the sector, never mind attract the new investment required to create the extra capacity that will be needed soon to cope with the extra millions of ageing baby boomers.”