The Costs of Rising Energy Prices – How the Energy Crisis will Impact the Health and Social Care Sector

“How can I afford to heat my home this winter?” – That has been the number one question across the nation since the energy price cap started rising.

The continued rise in energy costs will prove to have detrimental effects not only on households, but also catastrophic consequences for our health and social care system.

Financial Viability

The headlines are staggering –

“130% Price Jumps”

“683% Increase in Energy Costs”

“£2m Per Month Price Hikes”

And these are all in relation to the costs that our NHS and health and social care providers will face this coming winter.

With a steady increasing cost to energy, the health and social care sector can’t seem to catch a break when it comes to funding problems. If the sector wasn’t already in enough trouble post-pandemic, the energy crisis is only augmenting it.

NHS staff are already burnt out and underpaid. Further, many hospital buildings have not been updated to be the most energy efficient they can, such has having insulation, triple glazed windows and/or solar panels. Thus, the costs of running and heating these essential buildings will be compounded due to inefficiency where energy is concerned. This means sacrificing precious resources that could assist with providing patient care so that the hospitals can stay open and running, putting NHS trusts in an impossible position when it comes to performing their primary function – providing healthcare to people.

Saffron Cordery, interim chief executive of NHS Providers, echoes the concerns of NHS trusts everywhere about the negative financial impact this will have on their ability to provide services and staff – especially the younger and lower paid members who are already in financial hardship amidst the cost of living crisis.

The NHS is not alone in its suffering – adult social care (“ASC”) services are also facing impossible decisions when it comes to keeping their businesses up and running and providing quality care and support. Unlike the public, care homes do not get the benefit of the price cap nor the £400 energy rebate. This means that they could face astronomical increases in their energy costs. In the last 12 months providers have already faced a 683% increase in energy costs, rising from £660 per bed per year last year at this time to currently paying £5,166 per bed per year. Based on the October 2022 market rates, and with 454,933 CQC registered beds, the approximated impact of the rising energy prices over the last year on the sector is over £2bn per annum.

It has also been noted that the rising costs of energy will stamp out any profit margins generated and drive many providers to insolvency at a time when demand for these services is high. This comes on top of a sector already struggling to stay afloat due to staff and funding shortages.

Adverse Health Impacts

Not only will the rising energy causes adversely impact the financial viability of these services, but it will also lend itself to a public health emergency.

Hospitals predict there will be a surge of inpatients as a result of the rising energy costs in the coming months.

Katie Schmuecker – principal policy advisor at the Joseph Rowntree Foundation – encapsulates the conundrum perfectly stating:

“The rising price of essentials are a huge threat to health. It’s morally indefensible that already people in some parts of the UK die years earlier than they should, and we cannot allow this injustice to be made worse this winter. Not being able to afford a warm home and healthy food causes untold stress and anxiety. It also affects physical health due to a lack of nutrition and infectious diseases made worse by the cold. Over 7 million households were already going without at least one essential like food in May. The number of people going without common necessities will become an unmanageable risk if nothing is done.”

Data has shown that fuel poverty rates – taking into account the £400 energy rebate – will reach close to 50% in October 2022 and 55% from January 2023. As people are unable to afford to heat their homes there will be an uptick in respiratory infections, malnutrition and hospital admissions for children. Older, vulnerable people will be at an increased risk of heart attacks, strokes and falls.

Matthew Taylor, Chief Executive of NHS Confederation, has called this a humanitarian crisis – forcing people to choose between meals and heating their homes.

Calls for Reform

It is unusual for the health care sector to comment on energy prices – proving even further how serious this is.

The NHS Confederation has written a letter to the Chancellor asking for immediate and targeted support.

Care England has also written to Parliament about the impact of these energy prices have on the ASC sector and has asked for it to pledge its support in the form of the following measures:

• A per bed price cap;
• Extension of the £400 energy rebate to vulnerable people in care and supported housing; and
• Removal of VAT and Green Levy on energy bills.

The Government has ultimately passed off responsibility to the rise in energy prices stating: “No national government can control the global factors pushing up the price of energy, but we will continue to support businesses, including care homes, in navigating the months ahead.”

This alleged support comes in the form of doubling support for high-energy usage businesses, reducing employer national insurance by increasing the Employment Allowance, introducing a 50% business rates relief, freezing the business rates multiplier and slashing the fuel duty which will be worth £4.6bn over the next 5 years. However, seeing that Leeds NHS Trust alone expects a £2m per month price hike, this will barely cover the tip of the iceberg that is the energy price crisis.

The Government has also stated that it has made £1bn available specifically for ASC via the Local Government Finance Settlement. Again, with the sector facing nearly a £2bn increase compared to last year, this is simply not enough.

What Next?

It is clear that the health and social care sector has been neglected when it comes to proper funding to ensure business viability and the delivery of high quality care.

What is needed, and has been called for by many sector leaders, is immediate and targeted support to help them through at least this winter.

Professor Martin Green OBE, Chief Executive of Care England sums it up nicely:

“While these measures are incredibly important to protect public health and support struggling households across the country, parity must be introduced in the treatment of the most vulnerable in our communities. Without immediate and targeted support from Government, this energy crisis poses a very severe risk to the sustainability of care services across the country….The energy crisis being witnessed today may be what finally pushes it over the edge. While long-term reform is undoubtedly the responsibility of the incoming Prime Minister, action is required immediately to avoid widespread catastrophe.”