The total of private care home operators going bust grew by 12 per cent in the past 12 months. The annual rate of failures among private providers has more than doubled since the economic crisis began, with 250 residential care operators shutting.

Councils, a vital source of income for private-care providers, are slashing referrals and now seeking to shut their own facilities to meet savings targets. Andy Burnham, the shadow Health Secretary, called the wave of closures a “crisis”.

Providers are said to be caught in a perfect storm of diminishing income while struggling with fixed costs and debts left behind from their rapid expansion during the economic boom. Campaigners claim it will be elderly people – many dementia sufferers – who suffer.

Mr Burnham warned that the closures were part of a wider collapse in social care driven by spending cuts imposed on town halls. One authoritative study places the amount cut from Britain’s adult social services at up to £2bn.