Public policy, not pandemic, is what counts for social care, says leading market commentator
LaingBuisson has today published the 5th edition of its respected Adult Specialist Care UK Market Report.
The report focuses on the social care market for adults under the age of 65, and particularly residential care and supported living. In addition to LaingBuisson’s proprietary research, it makes use of the latest official data for 2020/21 recently published by NHS Digital. This is a sector that weathered the storm of Covid-19 relatively well, proving itself resilient and performing strongly throughout 2021. Most additional costs were mitigated by government subsidies, including the Infection Control Fund. The report shows what has mattered more to this £13.6 billion UK market is what has been happening alongside the pandemic.
Public policy, funding and regulation remain the main drivers in this market. Government funding decisions in the autumn of 2021 have disappointed the social care sector, which will continue to operate in a challenging financial environment. Austerity continues.
Given the reliance in adult specialist care on the public purse, the impact of this is widespread. Social care’s recruitment and retention challenges are well documented and the inability to flex prices upwards for publicly funded service users makes it hard for providers who already face the pressure of National Living Wage increases and rises in National Insurance to compete for staff.
The underlying profitability of larger adult specialist care home providers has fallen over the last decade from an EBITDAR margin of abut 30% to 20%. They remain more profitable, however, that public-pay facing operators of care homes for older people, who have been particularly hard hit by austerity-driven pressure on prices and margins.
Covid-19 increased the rate of adoption of digital technologies, yet this is not fully exploited. The social care White Paper, ‘People at the Heart of Care’ recognises the importance of digital technologies in the future delivery of care and commits to additional funding to support this.
Austerity, together with a preference on the part of service users and their families for supported living, is driving an increase in supported living part of the market at the expense of registered residential settings. The benefit for cash-strapped councils is that the property costs of supported living can be transferred to central government funded Housing Benefit.
Report author, William Laing said:
‘The main story to emerge from this year’s report is the expansion of supported living, as an alternative to residential care, which looks set to continue for two decades and beyond. Not only are local authorities making more placements in supported living, but also government policies are highly supportive of investment in supported accommodation to offer more choice to younger adults with support needs, especially those with learning disabilities. Supported housing is an exception to the ‘austerity’ rule that still pervades publicly paid social care’. While the decline of residential care may be a threat to some operators, it is an opportunity for most larger groups – which have taken the opportunity to diversify into supported living. Service providers, property investors and several registered social landlords are now working together to offer improved support and accommodation packages.’