LGC’s essential daily briefing examines warnings about sustainability of Allied Healthcare
Today’s impact of austerity on prevention: Preventative services hit hardest as county sets out ‘core offer’
Today’s impact of austerity on care: Warning of disruption amid fears over care provider’s viability
Today’s impact of austerity on metropolitan authorities: Stephen Houghton: County need mustn’t distract from urban plight
The Care Quality Commission’s warning today that financial problems at Allied Healthcare meant “a credible risk of service disruption” from 30 November speaks volumes about the dire state of social care around the country.
It leaves 84 councils scurrying around to find alternatives to the service offered by one of England’s largest home care providers, potentially offering some relief to other firms in a sector which has suffered as councils have driven down costs over nigh on a decade of austerity.
While the CQC maintains Allied Healthcare cannot give adequate assurances of functioning beyond that date the company has insisted it can and will, calling the CQC’s intervention “premature and unwarranted”.
With adult social care absorbing 38% of total council spending, according to the latest budget survey by the Association of Directors of Adult Social Services, the episode has – whatever Allied’s exact financial circumstances – highlighted that councils are reliant on companies about whose sustainability they may be somewhat dubious for a huge proportion of their spending.
The most famous financial disaster in social care remains Southern Cross’s 2011 collapse, which rival care home provider Bupa blamed on councils driving down costs in the market, and saw 752 care homes returned to landlords or handed to new operators.
These different cases illustrate the lack of sustainability in the care market.
Councils, being hardy flush with cash, must bear down on care service prices. Northamptonshire CC commissioner Tony McArdle in July told LGC that 70% of the council’s expenditure was through third party contracts, all of which would be subject to a “rigorous review”, as the council sought to plug a £70m budget shortfall. Of course councils should not reduce prices to an extent that they drive providers out of business or turn those that remain into effective monopolies.
Providers, by contrast, must make money but not charge so much that councils cannot afford them.
Since care is a demand-led service and costs continually rise – especially in such a staff-intensive business – while budgets tighten, the sound of an unstoppable force hitting an immovable object may be heard.
As Richard Humphries, senior fellow - policy at The King’s Fund thinktank, noted in LGC in June, adult social care’s 38% share of total council spend is simply unsustainable and has profound implications for the purpose and future of local government.
And with a loud silence still emanating from Whitehall on the date of the long promised social care green paper, help from that direction looks improbable.
Chancellor Philip Hammond promised the paper “shortly” in his Budget speech, which might mean anything, though he did find £650m to tide care over until the comprehensive spending review (although the small print showed the lion’s share of this cash could be spent on children’s social care instead, should recipient authorities believe that is where the need is highest).
Is this an un-squareable circle of councils facing fewer resources, higher demand and a lack of real insight into the financial situation of providers on which they rely?
As though this were not difficult enough, the politics are awkward too.
Relatively few people see or experience social care at any one time, but the resources it absorbs leaves little for services that are on full public display to voters, like highways, street lighting and waste management.
The impact of today’s announcement will be felt by some of society’s most vulnerable people.
As Caroline Abrahams, charity director at Age UK, today said: “Given the fragile state of the care market today’s news is unsurprising, but it is still massively concerning for the thousands of older people and their families who receive services from Allied Healthcare.”
Mark Smulian, reporter