The new Care Bill, which is intended to make the provision of care simpler and fairer, will in fact reveal the true extent of underfunding in residential care and the unjust practices used to support it, says a new report, launched today by Independent Age.

Independent Age has calculated that residential care is currently underfunded by at least £700m1 a year – with councils, care homes and ultimately older people and their families filling the gap. Local authorities currently buy residential care places for the poorest pensioners at between £40 and £150 below the market rate. Many care homes pass this onto individuals, either by asking families to „top-up‟ the cost of their loved one‟s care home places – which Independent Age calls the „secret subsidy‟ - or by charging feepaying residents („self-funders‟) more for the same level of care.

Independent Age predicts that with the introduction of the Care Bill these practices and the true costs of care will become more transparent, having serious implications for individuals, care homes and local authorities. It is calling on the government to properly assess and fully fund the cost of councils providing care.

The report says thousands more individuals will end up paying a „secret subsidy‟ top-up simply because, though everyone with assets of less than £118,000 will get help for the first time, they are likely to already be in accommodation which costs more than the rate the council usually pays. They will have to top-up the amount the council is willing to pay.

But the impact is not just on individuals. Under the new regime, every self-funder in residential care will be able to ask their local authority to purchase care for them at the council‟s standard rate. As a result, the report says, care homes will come under greater pressure because they may no longer be able to rely on self-funders paying more for their care.

And as some care homes struggle to maintain profitability, local authorities will in turn come under greater pressure to pay the real market rates for care, not just a rate that is affordable to them.

Independent Age Chief Executive, Janet Morrison said: “Whilst we welcome the great progress the Care Bill represents it‟s crucial the government addresses these issues now. We will continue to press for realistic funding of local government‟s social care responsibilities. Without it, local authorities will come under even more pressure, care homes will suffer and more people will end up topping up care which should be free. In addition to funding, it‟s important that regulations on top-up fees are not just maintained at current levels but tightened and we will be asking the Department of Health to improve the statutory guidance regarding these as the new Bill is developed in the coming months.”

1 Care industry analysts Laing & Buisson estimate that local authorities purchase care home places on average at £40-£150 below the market rate. Altogether there are 143,000 people who have their places fully funded by the council. This suggests that care homes are underfunded by around £700m a year.

Notes to editor

About the report

The report, Short changed: The Care Bill, top-ups and the emerging crisis in residential care funding is Independent Age‟s second report on top-up fees as part of its End the Secret Subsidy campaign.

Top-up payments – paid by relatives to improve the quality of council-funded care – should be voluntary, and councils should check that families can afford to pay them. But Independent Age has found that most councils do not carry out these checks properly and the charity receives one call every working day from relatives concerned about the fees. Because councils fail to give them the advice and support they are legally obliged to provide, many families pay these top-ups, which can amount to several hundred pounds a week, without ever realising they are unnecessary.

About the author

James Lloyd was appointed Director of the Strategic Society Centre in September 2010. James has worked at a number of think tanks and at the Prime Minister‟s Strategy Unit. He has a particular interest in social care, housing, pensions and higher education.

About Independent Age

Founded 150 years ago, Independent Age is a growing charity helping older people across the UK and Ireland through the „A B C‟ of advice, befriending and campaigning. We offer a national telephone and email advice service focusing on social care, welfare benefits and befriending services, which is supported by a wide range of printed guides and factsheets. This is integrated with on-the-ground, local support, provided by a network of over 1,500 volunteers offering one-to-one and group befriending. For more information, visit our website

Speak to one of our advisers for free and confidential advice and information. Lines are open Monday to Friday between 10am - 4pm. Call 0845 262 1863 or email

Share this article

Print this page