Almost half of councils in the UK who responded to a survey have had care contracts handed back to them because they did not pay enough to deliver the services, an investigation by BBC Panorama has found.
Out of 197 local authorities who responded to Freedom of Information requests, 95 said they had had contacts returned by suppliers.
Analysis done on behalf of the BBC has also found 69 companies providing care homes closed in the last three months and a quarter of all care companies in the UK are at risk of insolvency.
The revelations demonstrated the need to end the social care “funding crisis”, a spokeswoman for the Local Government Association (LGA) said. “These figures show the enormous strain providers are under, and emphasise the urgent need for a long-term, sustainable solution,” said Councillor Izzi Seccombe, chair of the LGA’s community wellbeing board.
The BBC also spoke to several care companies struggling to pay carers’ wages and travel allowances with the money they receive from council contracts. In one example, a council was paying £13.10 per hour of care when the cost of providing the service was £15. Firms also told to the BBC they had difficulty hiring and retaining staff.
The UK Home Care Association warned last October only one in 10 councils were paying contractors the average cost of providing care taking into account the increased National Living Wage. At the time it also warned that a growing number of firms were handing back contracts.
Philip Hammond, the chancellor of the exchequer, announced an additional £2bn of funding for social care in England over the next three years in his spring budget earlier this month. Of this £1bn would be made available this financial year. But Seccombe said this needed to be “just a starting point” and that there is still a projected funding shortfall.
“We have warned that the combination of the historic under-funding of adult social care, and the significant pressures of an ageing population and the National Living Wage, are pushing the care provider market to the brink of collapse,” she said.
In response to the BBC’s findings the GMB, a union that includes social carers, NHS staff and local government employees, said it was the central government’s responsibility to fund the care of “the elderly and other vulnerable adults” and called cuts by successive governments “a false economy”.
☛ Want to stay up to date with the news? Sign up to our daily bulletin.