Who owns care in the UK?

With care services in dire straits, it is tempting to take whatever money is thrown at them, but oversight and accountability are vital.

carers

 

This week we published an article on private equity firms’ interest in UK childcare. It’s a complicated subject. Childcare badly needs investment as it faces funding problems, in large part due to underfunding by government of ‘free’ places, and staffing shortages. Start-ups looking to offer affordable and flexible childcare need money to scale. But money rarely comes without strings attached.

A similar situation exists for elder care where private equity has gained more of a hold over the last few decades. This is again because of underfunding by Government as well as greater demand as people live longer. We have yet to fully respond to the implications of our ageing population, a subject which has been talked about for several decades and appears to have been continuously kicked down the road. So here we are in 2023 in the midst of a general care crisis – in childcare, in elder and social care and most definitely in health.

Different private equity firms operate in different ways with different management practices, but critics are worried that their loyalty may be more to their shareholders and bosses than to their ‘customers’ and about the impact this might have both on the quality of care they provide. There are also questions, in some cases, about the financial stability of the organisations they run as well as local accountability and transparency.

In 2019, 84% of care home beds were paid for by private firms, including those owned by private equity firms, with local authorities and the NHS and families covering the costs. The top five private companies are reported to control about 11% of the market, with two of these owned by private equity firms and another being previously owned by a private equity firm before it went into administration and was acquired by a US hedge fund. In addition to this company’s collapse, another leading UK provider, Southern Cross, went under in 2011.

Funding and care management is, of course, a complex world and different firms behave in different ways, but underlying issues of transparency are important. In the US, Joe Biden’s administration has proposed rules requiring nursing homes to disclose more information about their ownership and management to provide clarity about investments by private-equity companies or real-estate investment trusts. In the UK Labour is pledging to build a National Care Service that will require private providers to meet certain care standards and to run care homes in a financially sustainable way.

The same concerns about quality, transparency and accountability should be part of the debate about childcare. Yes, childcare needs urgent investment, but not at any cost. Care, both for older and younger people, is going to play an increasingly important role in our lives as we live longer putting more demands on working age people. It needs to be much more central to discussions about economic infrastructure and growth, but also about what kind of society we want to live in in the future.



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