CASH-HIT local authority leaders are having to spend almost £1m to settle a long-running row over care home fees.

The dispute had plunged the future of more than 3,000 elderly people into doubt, with claims that private nursing and residential homes could go out of business.

But now Durham County Council has come up with an improved offer, aiming to take account of the increased costs to care home owners.

Care home owners in the county had complained that an increase in the National Minimum Wage had added to their costs, but the council had offered only an additional £4 per resident each week.

An increase in the DSS rate meant the council was paying an additional £40 a week to its own care homes, which provide about 30 per cent of the available places.

Now the council has agreed to make an improved offer, the equivalent of between £13 and £17 a week per resident.

Nigel Porter, deputy director of social services, said they had written to all the county's privately-run homes, setting out details of the proposal.

He said: "We recognise that the minimum wage change will make a difference, and we hope this will resolve the issue.

"We have financial restraints but we value these independent homes, they make an important contribution to the care we offer people."

The improved offer will cost the authority an estimated £935,000 a year, but Mr Porter said this would not mean cuts in other services.

He said: "It will become part of the county council's budget and it is not coming from elsewhere in terms of services. It will not mean cuts elsewhere. The county council will be looking within the existing resources it has got to finance the changes."

He said they were hoping for a positive response from the care home owners.

He said: "We depend on each other. They can't operate without us because we provide most of the people who are in their homes. And we depend on them, because they provide about 70 per cent of all the placements we make.

"We rely on each other and that is why we have to work in partnership."

Jim McGeorge, spokesman for the County Durham Care Homes Association, said they would have to consider the details of the offer before making a formal response.

He said: "It still does not look like there is a lot of money on the table.