Carmarthenshire Council is looking to build or redevelop three care homes to keep pace with its ageing population and reduce the cost of top-up fees charged by large privately-run care companies.

Senior officer Jake Morgan said the county’s over-75s population was growing by 3% per year and that this would increase to 4.5% in five years’ time before settling back to 3%.

The upshot, he said, would be more people needing care and an estimated 60% rise in the adult social care budget over the next two decades from £81 million to £129 million, excluding variations in income.

Addressing the council’s health and social services scrutiny committee, the director of community services said: “Sometimes it’s hard to grapple with the scale of cost pressures that we are going to deal with.”

Mr Morgan’s draft report for 2023-24 there was continuing consolidation in the care home sector by large, often hedge fund-backed, companies which monopolised the market and charged up to 25% top-up costs.

Mr Morgan told the committee that working out who actually owned these care homes or was responsible for their leveraged debt could be “indecipherable”. He said: “We have advanced plans to rebalance the sector more in our favour.”

He described the current situation as “a failure of national regulation”, adding: “The Welsh Government are trying to do something about it.”

Mr Morgan said the council would need three 60 to 70-bed care homes over the next four to five years with, importantly, nursing care provision for more frail residents.

One idea being looked at is a new nursing home in the £200 million Pentre Awel health and well-being development in Llanelli, the first phase of which is due to open in spring 2025.

Mr Morgan said: “My professional judgement is that people who are going into residential care should be going into residential nursing care.”

The need for qualified nurses to look after frail residents brings challenges of its own though and, according to Mr Morgan, Hywel Dda University Health Board, which covers West Wales, has cut its funding for nursing care home beds by 50%.

The benefit for frail residents of being in a home with nursing provision is less chance of having to move somewhere more appropriate to their needs.

“In your last six to nine months of life, to move to another facility is hugely detrimental,” said Mr Morgan, who said the council had a “really good relationship” with the health board about what were complex issues.

He said a new care 72-bed care home would cost £16 million to £19 million and that it was important to know how much the Welsh Government would contribute and how quickly it would release the money.

Mr Morgan added there had been at least three private care homes which had shut at very short notice in Carmarthenshire in the last couple of years.

“It’s not overstating the point to say that’s a life or death sentence for some residents,” he said.

Like all councils, Carmarthenshire’s social services budget is under relentless pressure due to rising demand and the high costs of private residential care for children and for people with learning disabilities, who tended to live longer than in the past, as well as older people.

Mr Morgan’s report said placing 12 young people with neuro-developmental and mental health needs in residential settings cost the council in excess of £3 million in 2023-24 – an average of nearly £5,000 per child per week.

He told the committee “it was not unusual” for UK councils to be charged £20,000 to £30,000 per young person per week and that this could eventually bankrupt some of them.

The Welsh Government is planning to eliminate profit from the care of children in Wales in 2026 but this will mean councils having to rapidly increase their stock of residential homes and bolster in-house foster care services.

Mr Morgan said the number of young people needing residential care was lower in Carmarthenshire than other counties and that it was looking to open three such settings, each with four of five bedrooms.

Two of them, he said, were close to opening. But this programme is facing delays, meaning a higher bill for private provision. Mr Morgan said one of the aims of council-run children’s homes would be shorter stays for young people, reducing costs.

Mr Morgan said both adult and children’s services in Carmarthenshire were safe and effective and that staff were doing a good job in very difficult circumstances.

More families were needing help due to financial pressures, he said, and young people’s mental health was being negatively impacted by social media.

He added that a lot of experienced social care staff had left the profession since the Covid pandemic but that the workforce in children’s services was in “a healthier place” than it had been for the last six or seven years.

The report also said that residential homes had opened in Carmarthenshire for unaccompanied asylum seeker children as part of a UK Hone Office scheme. There were 30 such young people in 2023, many more than normal.

“Again, the private sector responded rapidly with packages that exploited the shortage in supply and cost us up to £1,000 a week,” said Mr Morgan’s report.

“We no longer use these providers and have five properties in Carmarthenshire set up from scratch with 10 young people living in them.”

Following last month’s Budget, Welsh Liberal Democrat MP David Chadwick warned that GPs and care providers across Wales will be “pushed to the brink” without an exemption from the Budget’s National Insurance tax hike.

Wales’ GP’s and care providers are already in crisis, but the tax hike will add to the pressure by forcing small care providers and GPs to pay more in National Insurance Contributions.

The UK Government provided extra funding for the NHS and other public sector organisations to cover the cost of the tax rise, with Welsh Secretary Jo Stevens stating similar funding would be made available for public bodies in Wales.

However, GPs and the vast majority of care providers in Wales are private and so won't benefit from this help.

The Welsh Liberal Democrats have called for crucial health and care services in Wales to be exempted from the NI hike - or risk them shutting up shop.

David Chadwick MP said: “When I speak to GPs and care providers they tell me of the immense pressure that they are under following years of Conservative mismanagement.

“The decisions the Chancellor made at the Budget will push those crucial services to the brink. Some could even be forced to shut up shop. I have already been contacted by dozens of GPs concerned about the impact this will have on their practice.

“People must be able to access decent health and care services. To deliver this, the government must change course and exempt GPs and care providers across Wales from the tax hike.”

Private service providers run 72% of adult social care sites in Wales.

GPs have worked in legal partnerships since the inception of the NHS in 1948 and do not act like normal businesses. They have no shareholders, and have no ability to increase prices to absorb increased costs.