Care homes warn crippling energy bills could force closures

Care operators facing 100% increases in their energy bills to keep residents warm this winter have demanded urgent government intervention to avoid home closures.

A typical care home of 50 residents already spends about £50,000 annually on gas and electricity but price hikes could mean operators paying double that, according to one energy broker. Care homes are not covered by the price cap which protects domestic consumers.

“It could be the straw that breaks the camel’s back,” said Melanie Weatherby, co-chair of the Care Association Alliance.

Nadra Ahmed, executive chair of the National Care Association, said the energy price crisis “will make some providers feel they are unsustainable”.

“We can’t turn [heating] off,” she said. “We need it running all the time. I think [the impact] is going to be substantial, especially through the winter months.”

Steve Silverwood, of ECA Business Energy who negotiates for firms including care operators, said: “The care homes that haven’t already purchased energy for forthcoming renewals are going to see 100% plus increases. A care home can be spending £50,000 plus [on energy] and to double that is unbelievable. It’s frightening times.”

The sharp rise is driven by a trebling of wholesale 12-month gas contracts over the last five months, future uncertainty about supply, and energy taxes, Silverwood said.

Some operators suggested staff, entertainment and maintenance could all be cut to meet steeper bills.

Weatherby said many smaller operators, eager to find the cheapest deal, signed up to energy firms that have already collapsed.

“Because care home gas use is so high it will be hard for them to find anyone else at a reasonable price and it might be that they can’t find anyone at all,” she said. “This is something the government needs to take into account in their negotiations with energy companies because you can bet they are doing that with hospitals.”

Related: UK care homes say funding shake-up threatens their viability

Operators have also faced soaring insurance premiums, declines in occupancy and a deepening staffing shortage which has seen the cost of agency workers double in some areas. They are also bracing for the prospect of rising food bills.

One small operator who was already facing a 17% increase in gas costs this year and a 20% increase next year on deals negotiated a month ago, told the Guardian that, unless public funding for care home beds was not increased urgently, care providers “won’t be able to afford to operate. We will have to close our front doors”.

His annual energy bills will rise from £58,000 to £75,000 and the additional cost comes on top of a 75% increase in insurance premiums over the last two years and a doubling of wages for agency staff needed because of staff shortages. Meanwhile, his last annual care fee increase from the council was less than 5%.

Without an increase in funding, operators will face a decision about whether to “burn money” or withdraw from the market, he said, adding staff were quitting to work at “Aldi, Lidl and Amazon for up to £12 an hour” while council funding means he can only pay around minimum wage.

This week, six of the largest not-for-profit care operators who look after about 95,000 older people, wrote to the government warning of the worst staffing crisis in their history with staff turnover at 30% and essential care being denied to people who need it. MHA, Anchor Hanover, Sanctuary, the Orders of St John Care Trust and the National Care Forum want the home secretary, Priti Patel, to sanction greater recruitment of foreign care workers. They are seeking a cash bonus for care staff to stop them quitting, an extension of infection control grants which operators say have helped keep them afloat, but which are due to end this month.

Nicola Richards, who represents care homes in Sheffield, asked: “Where and how do you recover the cost [of utility price hikes] because we don’t have a surplus of money to put into the light and heat?”

She said homes could cut staff, scrap maintenance projects and cancel entertainers to balance the books. “You can’t have the new carpets, curtains and redecoration, and when it is their home, that’s quite difficult. It’s robbing Peter to pay Paul.”

The Department of Health and Social Care has been contacted for comment.