Unprecedented amount of insolvencies consuming the Care Home sector

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Senior Woman Being Served Meal By CarerSome worrying figures have come to light and they show that an unprecedented amount of care homes in the UK have been declared insolvent this year. New government figures show that 75 care home businesses were declared bankrupt in 2016, up from 74 the previous year.

The figures from the previous years and the current year gone by, add up to a whopping 421 care homes businesses that have collapsed since 2010. The added pressure on care homes is being attributed to budget cuts by local authorities, who have held up contributions for care home residents. To make matters worse, overheads like staff wages have seen a steady rise.

Earlier in march, Philip Hammond, the chancellor announced an extra amount of £2bn in funding granted towards social care in England over the next three years. The funding was announced after the government had been heavily criticized for failing to support social care.

Chris Stevens, partner at FRP, warned that insolvencies in the sector were a trend that is likely to continue this year. He said: “The fall in sterling against the euro will exacerbate pre-existing pressure on staffing costs in a sector reliant on overseas workers to fill frontline staff vacancies, and where margins have come under increasing pressure from the rise in the minimum wage, pension costs and cuts in local authority funding.

“The care home sector is beleaguered due to all local authorities facing overall double-digit budget cuts for this current financial year under way and beyond.”

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