CASH-STRAPPED local authority leaders are having to fork out 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 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.

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 per 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.

Deputy director of social services Nigel Porter said they had now 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."