A radical shake-up in the way thousands of elderly people in Norfolk are looked after, including the closure of outdated residential homes, will need to make money for it to be viable, councillors have been told.

A radical shake-up in the way thousands of elderly people in Norfolk are looked after, including the closure of outdated residential homes, will need to make money for it to be viable, councillors have been told.

Norfolk County Council needs to provide an extra 2,500 care places across the county over the next decade and wants to switch to more housing with care schemes rather than its residential care homes.

The council says the 26 care homes it runs in Norfolk are no longer suitable and it would cost �60m to refurbish them, so the authority, which provides some 830 care places in residential homes in the county, is instead considering closing a number of them and building around 20 new housing with care schemes, ideally on council owned land.

But to generate the �200m to build those new housing with care schemes council chiefs are recommending that a new care company is created to run those homes.

Council chiefs say that company, which would be wholly owned by Norfolk County Council and operate within the Norse Group, would be “the best of both worlds” as it would have the commercial know-how to generate funding for the new schemes, while care homes and their 2,000-plus staff would remain in the public sector rather than be privatised.

But the proposals have sparked controversy, with some councillors concerned that the new company would suffer from a conflict between the need to make money and to provide good care for elderly people.

At a meeting of the council's adult social services overview and scrutiny panel yesterday concerns were raised after officers said some spaces in the new schemes would be sold to people not eligible for social services care to create what officers described as “a new income stream for the county council”.