Middle class pay £10,000 care homes ‘stealth tax’


Middle-class families are paying a “stealth tax” of £10,000 a year for places in care homes for the elderly, a study has found.

The extra charge is being used to subsidise residents who cannot pay themselves and have to rely on council funding, the first detailed analysis of fees has found.

There are about 400,000 elderly people living in care homes and almost half pay for themselves, either by running down their savings or selling the family home. People must “self- fund” if they have assets totalling more than £23,000.

The report by the charity Age UK found that this group pay average weekly bills of between £603 and £867, depending on the area, although in the southeast fees often run to more than £1,000 a week.

This is at least £200 a week more than local councils pay for the same rooms for elderly people who have no savings. Over the course of a year the extra paid by self-funders amounts to more than £10,000. This compares with about £40 a week four years ago.

Campaigners said yesterday that it was unfair that those who had saved for their retirement were being made to pay not just for themselves, but increasingly for others too.

Age UK called the extra payment a “backdoor tax”. Stephen Burke, editor of the Good Care Home Guide and a long-standing campaigner on the issue, said it was “a stealth tax on the middle classes that hides the full extent of the care crisis in this country”.

The premium has grown in recent years. Budget cuts mean that councils have steadily reduced what they are prepared to pay commercial care homes for beds.

As the biggest buyer in the local market, councils can drive a hard bargain and in many cases pay below the cost price. Care homes then have to charge families above the odds to make up the shortfall or face going out of business.

Residential care is almost all provided by commercial companies, which are struggling financially. Costs have shot up by 30 per cent in the last year alone because of the national living wage and profits have collapsed. The care home regulator has warned that thousands of providers may go bust or pull out.

Age UK’s report also discovered that care homes often arbitrarily raised fees in the middle of the year, saying that a resident’s needs had grown or they needed some other form of care. The charity wants greater protection for self-funders and more openness about who is paying what for rooms.

Caroline Abrahams, the charity director, called the disparity between what councils pay and self-funders “robbing Peter to pay Paul” but believes that care homes have little option.

“We are worried that too many older people who pay for their own care home fees are getting a raw deal and are unfairly being asked to pay the price for a failing care system,” she said.

“They not only often face eye- wateringly high weekly rates, [but] calls to our helpline show that some are being asked to pay even more in ways that most of us would regard as ‘sharp practice’ as care homes struggle to keep the lights on.”

Mr Burke said that families were quite rightly shocked when they discovered how much a care home place cost, and would be more shocked to realise the reason was that they were subsidising someone else’s place. He predicted the situation would get worse as the population aged and spending on elderly care stayed so low.

“With more care homes closing and council budgets being squeezed, there will be increasing pressures on self-funders to cross-subsidise state-funded residents. Families should raise complaints with the ombudsman and the Care Quality Commission if they are unhappy with the way a care home operates,” he said. “Choosing a care home is often a stressful decision but older people and their families should spend time getting it right.”