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Payments which local authorities are willing to make for care home places for older people have slipped even further away from the levels deemed ‘fair’ to cover the costs involved and to give care home operators a reasonable rate of return on their investment, according to the latest research from healthcare market intelligence provider Laing & Buisson.

What’s more, the analyst claims that this latest investigation into ‘fair fees’ suggests that even if the Dilnot Commission’s recommendations on insuring against care costs were to be brought in, this funding would cover fail to cover even half the costs they are intended to finance.

Laing & Buisson’s latest revision to the well-respected Fair Price for Care toolkit has shown that dependency levels of care home and nursing home residents have risen faster than expected. Taken in combination with minimal increases in state funding for care home places, this means that the majority of English public sector funding agencies do not currently pay fees that are sufficient to encourage care home operators to invest in new capacity for state-funded clients.

Work carried out to revise the figures which sit behind the toolkit shows that average fee rate currently being paid by councils for residential care is now £50 per week below the ‘floor’ rate (a rate intended to apply to physically poor quality care home whose physical environment is ‘on the borderline of acceptability) and substantially below the ‘ceiling’ rate (intended for those providers which have invested in their facilities. See table below.

Gap between fair market fees and average fees paid by English councils for residential care in 2012/13


Fair fee as calculated by the Fair Market Price Toolkit Spreadsheet,October 2012 – March 2013 

 Residential care, older people  £527 per week  £596 per week
 Residential care, dementia  £553 per week  £623 per week
   Average fee paid by English councils
 Residential care (older people, including dementia)  £477  


Laing & Buisson’s annual survey of baseline fees (the rates councils will pay for care beds) have shown these failing to keep pace with inflation for the last three years. In the financial year 2011/12, baseline fee rates increased on average by 0.3%, compared with estimated home cost increases of 2.8%. Despite a slight upturn for the coming year, with the threat of judicial reviews leading to an average uplift of 1.6%, the latest incarnation of the Fair Price for Care toolkit shows that these remain some way shy from the levels required to ensure sustainability – and moreover to encourage further investment – in elderly care.

Following revisions in 2004 and 2008, this fourth edition of the Fair Price for Care toolkit represents the biggest revision to date and includes a new alignment of the costs involved in care provision with the work carried out by the Dilnot Commission.

Splitting out care home costs into four main areas: Care; Accommodation; Ancillary support (and other general living costs) and Operator’s profits, the toolkit highlights yet further concerns relating to the future of social care funding.

Mr Laing added: ‘The ‘care’ element of costs – which would be insured by the state under the Dilnot recommendations - would in actual fact cover well under half of these new ‘fair fees’, stretching to around 33% for residential care and 45% for nursing care. This means that the majority of costs will still fall to individuals.‘

Whoever works out what the state will cover will also have to make a decision on whether it will cover just the bare care costs, or if it will add in a reasonable operator’s mark up of around 10% in which to help create a sustainable care home economy and to encourage the capacity building which all research points towards a great need of.’

First produced in 2002 in partnership with the Joseph Rowntree Foundation as a means by which to provide a consistent and evidence-based means of calculating reasonable operating costs within efficient facilities, the Fair Price for Care toolkit is used by a variety of elderly care professionals from care home operators, to investors in social care to local authority commissioning teams to policymakers. It is regularly cited in judicial reviews held into local authority care fee settlements.



*Fair Price for Care is available now priced at £1,140 for PDF Explanatory Guide and Microsoft Excel tool. To purchase contact Laing & Buisson, 29 Angel Gate, City Road, London, EC1V 2PT. Tel: 020 7833 9123. Fax: 020 7833 9129.

For Further Information:


William Laing
Justin Merritt
Laing & Buisson   Laing & Buisson
Chief Executive   Operations Director
Tel: 020 7923 5399
Tel: 0207 841 0049


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