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Residential Care Services at a Glance – Council Spend Since 2015/16

The recently published annual assessment of the state of health and social care in England by the Care Quality Commission (CQC) has highlighted an urgent need for further investment in adult social care. By using Insights Spend’s public sector spend analysis system, we are able to take a more detailed look at how local government spending in this area has fared since the 2015/16 financial year.

Insights Spend shows that local authorities in England spent around £23.4Bn on the provision of all health and social care services in 2019/20, with just over 79% of this being spent on services carried out by private sector providers. Although the fact local authority spend on health and social care services tends to increase year-on-year probably comes as no surprise, the 2019/20 total figure does represent a notable increase of over 23% over the last five years.

The CQC report refers to a previous Competition and Markets Authority market study of residential and nursing care homes for older people which highlighted that “the current model of service provision cannot be sustained without additional public funding”. Insights Spend shows that spend on residential care services for the elderly accounted for just under 23% of all local authority health and social care spend in 2019/20, with this figure increasing significantly over the last five years and looks set to increase even further in 2020/21.

Although total spend on residential care services has increased year-on-year, the CQC report highlighted that “about a quarter of care homes had more than 75% of their residents funded by the local authority, and that these are the ones most at risk of going out of business”. However, Illuminator spend data revealed that local government spend with private sector residential care providers has also increased year-on-year since 2015/16. Total spend has increased by roughly 18% from 2015/16 to 2019/20, with the emerging picture for 2020/21 showing that the figure looks set to increase by at least a further 15%. Illuminator also highlights that the top five private sector providers, which accounted for 12.3% of the total spend in 2019/20, saw their collective earnings grow from £545.3M in 2015/16 to £558M in 2019/20 – an increase of 7.8% over the last five years.

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