Cheshire East may have to look at running its own care homes for the first time in decades because the price of commissioning services from the private sector is spiralling.

The council recently forecast a budget shortfall of £18.7m by the end of this financial year – and more than half of that is due to the mounting financial pressures in adult social care and children's services.

The council is now having a re-think over how it contracts for services.

Helen Charlesworth-May, executive director of adults, health and integration, told a recent meeting of the council's finance committee the pressure on adult social care was increasing because of price inflation including wages, the cost of paying for services in the private sector and because the Cheshire East elderly population is growing faster than elsewhere in the UK.

With regard to commissioning services from the private sector she said: "We had a strong market, there was a lot of competition and that enabled us to deliver a lower-cost service. Since the pandemic the issues primarily around workforce, which are being experienced across the whole of the economy, are manifesting most particularly in adult social care."

She said there are currently about 250,000 vacancies nationwide in adult social care.

"What that means is we have gone from operating in a very competitive market, essentially a buyer's market, to operating in a seller's market," she said.

The committee heard that in Cheshire East the local authority and the NHS combined commission less than 50 per cent of the care market – the bulk is commissioned by people who buy their own care and this affected price.

Mrs Charlesworth-May gave the example of Blackpool, where the local authority commissions over 75 per cent of the care market and so is a 'price setter'.

"In Cheshire East we are a price taker," said the executive director. "Now that is a very serious issue for us and it means we will have to change the way in which we contract in the near future. We are looking at how we can do that, how we can contract differently for services so that we have more control over price. …. But I also think, for the first time in 20 years, we probably need to think about what does a business case for running our own care homes look like."

The committee was also told another pressure on the council was people being discharged from hospital who needed social care.

Mrs Charlesworth-May said: "Over 50 per cent of the overspend that was incurred last year was directly related to the increase in the number of people coming to us through the NHS."

She said summed up by telling the committee: "We can only expect to see an increase in the overall level of expenditure because our population is aging and therefore there will be more demand…

"The things we have done so far is to reduce our overall level of bed usage for short-term beds so we are minimising the most expensive bit of the system, we are maximising investment into grants and the voluntary sector because those are people who are able to support people stay independent in their communities and we have invested heavily in home care – that's domiciliary care services – so that we're able to support more people to stay at home and fewer people coming into beds in residential and nursing care. That is broadly speaking what everybody else in the country is doing."

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