Care home providers are at risk of collapse due to the impact of Covid-19 and a lack of a long-term funding plan, MPs have warned.

Many care providers in England are “living hand to mouth” and the Government appears “complacent” about the potential for them to fail, according to the latest report from the Public Accounts Committee (PAC).

The coronavirus pandemic had highlighted how "care is not properly funded, lacks transparency and urgently needs reform", it said.

The impact of Covid-19 on the social care sector had put many providers at risk of failing, the report added, with care home occupancy having fallen from around 90 per cent at the start of the pandemic to 80 per cent by Feb 2021.

But it said the Government had poor oversight and "seems complacent about the risks of local market failure".

A key failure was the Department for Health and Social Care’s "reticence" to challenge local authorities which pay providers low rates for care, the MPs said.

The UK has one of the highest share of deaths amongst its care home residents

They have called for long-promised reforms, including a funding settlement and workforce strategy, to be set out by the end of the year.

The Government must lay out in detail how it will help providers move beyond the short-term support that has helped stabilise the sector during the pandemic.

The report, Adult Social Care Markets, said that most local authorities in England are paying providers below the cost of care.

It said this means many providers are forced to live "hand to mouth", unable to take the long-term decisions which would improve services.

They also warned of a lack of transparency about what people or local authorities get for the money they spend.

What now for care homes abandoned to Covid?

The report has called on the Government to assess and outline, by July, the support providers need in the short to medium term.

It also said providers should give clear and comparable information over fees and a breakdown of how this money is spent from next April.

Meg Hillier, committee chairwoman, said: "Carers, younger and older adults needing care, and home care have seen decades of neglect, and the 1.5 million who work in care deserve much better.

"The reforms to address this now must include a long-term funding plan that allows local authorities and providers to innovate and improve services. We cannot afford more broken commitments on care."

A Department of Health and Social Care spokesperson said: “Throughout the pandemic we have sought to protect everyone working in the social care sector or receiving social care, particularly older people who are more vulnerable to the virus, and have provided almost £1.8 billion for the sector, including infection prevention, control measures and prioritised the sector for the vaccine.

“As previously announced, the Health and Care Bill will introduce plans to develop and support improved adult social care oversight across England.

“We are committed to sustainable improvement of the adult social care system and, as affirmed in the Queen’s Speech, we will bring forward proposals later this year to ensure every person receives the care they need, provided with the dignity they deserve.”