Labour will force out private equity firms who provide poor services and leech money out of care homes, says Streeting

Labour’s Health Secretary, Wes Streeting, today pledged that the next Labour Government will build a National Care Service that requires private providers to meet decent standards, including delivering quality care for residents and running care homes in a financially sustainable way.

Labour will require firms operating care services to pay their taxes, and prevent the leeching of millions of pounds out of the system to service excessive levels of debt. 

Care workers will also be guaranteed fair pay, full rights at work and proper training, under the party’s plans. There are currently 165,000 vacancies in the social care sector, as carers are leaving in droves to work at places like Amazon, because the pay and conditions are so poor. In the past decade, according to NHS Confederation figures, carers pay has fallen from 13p more an hour than retail workers to 20p an hour less. Meanwhile, executive pay in the private equity-owned care homes has soared with directors taking home 13 times as much in salary as the average employee. According to UNISON, the highest paid executives at the five largest private equity owned care homes doubled from £146,000 to £297,000 between 2015 and 2020.

Research from the party finds that around 1 in 7 private equity-owned care homes aren’t providing good levels of care, according to Care Quality Commission ratings. Despite receiving around £314 million in public funding each year, private-equity owned care homes spend hundreds of millions servicing debt and avoiding tax. Two such chains have gone into administration in the past decade, leaving residents in the lurch over their immediate care and housing.

Wes Streeting, Shadow Health and Social Care Secretary, said:

“Care home residents deserve to be well looked after and to have the security of a financially stable care home. 

“Too many private equity firms are failing to provide basic levels of care to residents, while gambling with care homes’ futures and leeching millions out of the British taxpayer and the pockets of residents. Meanwhile care workers are leaving in droves to work at places like Amazon, because the pay and conditions are better. It’s bad for residents, their families and the taxpayer.

“The next Labour Government will enforce high standards from all providers and kick out those leeching millions out of care. We will recruit the care workers needed to look after residents well by guaranteeing fair pay, full rights at work, and proper training.”

Ends

Notes

• HoC Library estimates that around £314 million of public expenditure on social care was spent on private equity owned care homes in 2020/21.
• in a February 2021 report, The Centre for International Corporate Tax Accountability and Research (CICTAR) – a research centre founded by “unions and civil society groups” – said care home operators were using “tax havens and contrived corporate structures specifically designed to reduce or eliminate tax liabilities where profits are generated”.
• The IPPR say that private-equity in the care sector operate “high levels of borrowing, complicated corporate structures and cost-cutting measures such as tax avoidance and low staff pay. As a result, this model can leave them unstable, with twoof the big five providers – Southern Cross in 2011 and Four Seasons in 2019 – going into administration in recent years.”
• Research from UNISON found that private equity-owned care home directors take home 13 times as much in salary as the average employee, with the highest paid executives at the five largest private equity owned care homes seeing their pay double from £146,000 to £297,000 between 2015 and 2020.

https://www.unison.org.uk/news/2022/06/care-bosses-taking-home-13-times-wages-of-workers-says-unison-report/

• According to NHS Confederation, pay for care workers has fallen from 13p an hour above retail workers a decade ago to 20p below today.

NHS leaders warn that social care workforce crisis risks patient safety and could get markedly worse this winter (nhsconfed.org)

• Labour has asked the Fabian Society to review how the next Labour government can build a National Care Service. The review will look at how the next Labour government will guarantee good standards of care for all and professional standards for carers across the entire social care sector.