A NURSING home owner is warning of the "critical" situation facing care providers amid claims of under-funding.

City of York Council has proposed to increase its fees by 2.3 per cent towards the cost of looking after the elderly, disabled and those with special needs - whether at home or in residential establishments.

But care home managers and home care agencies have condemned the offer as "derisory", arguing that costs have gone up significantly and are set to rise again.

Dennis Higgins, of The Lodge, in Heslington, said: "We have a contract with the local authority, but it is one-sided. They are telling us how much they will pay us without taking into account our costs."

He said mounting financial pressures would force homes to close, while the elderly population was growing.

"The situation for care is becoming critical. We are getting to a two-tier system - people who can afford to come into my home and people who can't." Mike Padgham, chairman of the Independent Care Group (ICG), said it had worked with the council to determine a fair price for care, using the Joseph Rowntree Foundation assessment of care costs model.

"This showed that care in York is significantly under-funded. Nursing beds are under-funded by as much as £50 per week. Care providers need to employ good-quality staff and need to be able to pay them good wages to keep them."

Anne McNelis, who owns St Catherine's and Rosevale care homes, said: "Every year we get offered an inadequate fee level by the council and at the same time we are all trying to raise the quality of care."

A York Council spokesperson said the overall increase in fees had been between 13 per cent and 17 per cent over the past three years.

"Although the increase for 2004/5 is at the level of inflation, the actual fees paid to home owners in York remain some of the highest in this region."

She said the council had to make about £1.6 million in savings on social services for 2005/6, and residents were consulted on council tax increases to pay for proposed growth items - including fees above inflation to care providers.

Updated: 10:29 Thursday, April 28, 2005