Jitesh Patel, Senior Development Manager at Kajima Partnerships puts Care Home provision under the spotlight. With demand currently outstripping supply and the gap expected to widen further thanks to the UK’s ageing demographic, should councils be looking to private funding sources to deliver new schemes?
Care homes in the UK are in crisis. Already at saturation point, demand for places will double within the next 20 years with almost 190, 000 more elderly people requiring care by 2035. Limited supply is being made worse by less spending by government, causing a significant deficit in elderly residential care places. The National Audit Office has warned that around 10% of local authorities will exhaust budget reserves reassigned to cover adult social care within three years at their current rate of deployment, putting them at risk of insolvency. Councils must look to private sources of funding for new schemes in order to meet the escalating demand. If they do not, we risk leaving hundreds of thousands of vulnerable people without vital support.
The UK’s population is living longer. In 50 years’ time there will be an additional 8.6 million people over the age of 65, an equivalent population the size of London, in need of elderly housing. Demand for care home bed spaces is expected to increase by 9000 annually. Given that the current rate of care home development is at 5000-6000 new beds per year, it is clear that the UK is on track for a significant shortfall.
The result of this predicted shortfall will be further strain on an already over-burdened NHS. Research by the Building Research Establishment in 2016 estimated that the shortage of housing for the elderly costs the NHS £624 million per annum, with bed blocking a major issue. It has been estimated that 6.2 million elderly people stay permanently in hospital every year and of that figure, 682,404 of them can expect a delayed discharge, putting pressure on the NHS’ sparse resources.
Public Private Partnerships
If elderly care places cannot be funded by local councils, and should not be funded by the NHS, alternative sources of funding must be considered. Public Private Partnerships could provide the resources desperately needed by our most vulnerable members of society. However, private providers need to be able to expect at a minimum a long-term break-even scenario. A string of insolvencies among private operators in recent years betrays how difficult this is to achieve. We risk seeing private sector investment in elderly care evaporate, precipitating a crisis.
What we need now is an attractive set of projects to unlock untapped institutional funds and deliver the high quality care facilities to meet escalating needs. A viable new settlement would make use of existing public land to avoid high prices, in line with the initiatives of One Public Estate, according to which local authorities control in total over £60bn in assets not used in schools or housing, which compares with just over £11bn in receipts.
Collaborative working
The One Public Estate encourages collaborative working across both central and local government to free up land and promote regeneration and integrated public services. Not only does this release underused land for development but also transforms services by encouraging public sector partners to share buildings. The One Public Estate has had great success so far as partnerships are supported to make use of public land and property in a way, which meets local priorities. For example in Cornwall, public and private providers are already using the One Public Estate to work in partnership to deliver 10 integrated public service hubs in key areas across the county.
Public Private Partnerships can be advantageous for all parties involved, as not only do they encourage new ventures, they lessen the risks often associated with development. Construction and operational risks are taken on by the private contractors as well as the securing of funding for the project. Local authorities can rest easy knowing that the facilities they need will be guaranteed through nomination agreements and investors can have clarity over their returns due to fixed pricing arrangements.
The ultimate challenge we have is to modernise UK care homes, whether new-build or converted facilities, so that we can offer dignity, comfort and lifestyle to our elderly citizens, while averting a housing crisis in care homes.
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