A decision to halt the planned closure of Birmingham’s council-run old people’s homes is short sighted and could be costing taxpayers £15 million a year, according to a group of private sector care home owners.

Private sector residential home owners have complained to the district auditor after social services managers decided to freeze proposals to shut 10 remaining local authority homes, where the cost of providing nursing care can exceed £2,000 a week per person.

The buildings are, by the council’s own admission, unsuitable, expensive to run and do not meet modern care expectations.

City council leaders said plummeting property values meant the closure plan would have to be mothballed for the time being.

They had been relying on profits from selling the homes and the land to build modern care centres.

But the decision hit the private sector in the pocket. It already provides 85 per cent of elderly care in Birmingham and had been anticipating cashing in by pushing that figure close to 100 per cent as a result of the local authority homes closure plan.

Private home owners have accused the council of financial mismanagement and “sharp practice”.

Some say they had verbal agreements to accommodate residents from the council homes at fees of £615 a week.

The saving to the public purse would have been dramatic, according to Mike Gimson, chairman of the Moundsley Healthcare Group.

Mr Gimson spent £5 million building a 30-bed extension to his Moundsley Hall home on the understanding that the new rooms would be allocated to residents from the council’s Guestholme care home in Kings Heath, which was due to close.

He has been told by social services that Guestholme is not to close this year after all, leaving the extension standing empty.

Mr Gimson believes the council could save £15 million a year by closing all of its remaining old people’s homes and transferring residents to private care.

He said: “The council pays between £1,500 and £2,300 a week to look after a person in one of its own homes. We have an agreed rate of £615 to take council residents when local authority homes close.

“We thought we were working in partnership with the council, we thought we had an agreement. But this is just sharp practice. We are trying to work with social services, but they haven’t got a clue what they are doing. They just waste money left, right and centre.

“It is the private sector that is trying to improve standards of care. We are building new homes, while the council prefers to keep residents in unsuitable Victorian rabbit warrens where you certainly wouldn’t want to put your mother.

“We are sick and tired of social services wasting money and not achieving best value and quality care for elderly people in Birmingham.”

Mr Gimson said he found the council’s position “intolerable” in the light of a projected £9 million social services overspend this year on older adults services.

He said he had been told by assistant social services director Charles Ashton-Grey that the council is no longer prepared to pay £615 a week to place elderly people in private homes, and wants to reduce the figure to £525.

He added: “When you are talking about 30 people, that’s a difference of nearly £3,000 a week.

“We have written to the district auditor to complain formally about Birmingham social services wasting money by keeping their own expensive-to-run homes open when they should be delivering on promises to transfer residents to better and cheaper private sector homes.”

A council spokeswoman stressed that the remaining 10 old people’s homes will close eventually, although a timetable is yet to be agreed.

She added: “The current units will be replaced with a range of new facilities to choose from including extra care housing, new specialist care centres and new high quality residential care homes provided by the private or voluntary sector.

“Mr Gimson is about to open a new extension which he is keen to fill and he is enthusiastically offering this facility to the city. We are committed to improving the quality of care offered to our citizens and new units such as this may have a part to play, if available at reasonable cost.”

Cabinet adults and communities member Sue Anderson admitted that auditors have consistently expressed concern about the running cost of council homes.

She said work was underway to find ways of accelerating the closure plan.