Private off-shore companies no way to run care homesJuly 31, 2019
Most UK care homes were managed by local authorities until Margaret Thatcher reformed the system; now just 8 per cent are under state control. All four of Britain’s biggest care home businesses have been up for sale in the past year and have failed to secure deals, partly due
to the financial pressure of a long-term fall in local authority fees. This is fuelling questions as to whether debt-laden private investors are the right providers of a vital state-funded service.
Care England, which represents the independent providers, estimates that around £4bn is Needed from government to stabilise the sector. Strains have been highlighted by the collapse of Southern Cross in 2011 and more recently Four Seasons being taken over by its creditors after its private equity owner, Terra Firma, ran out of cash to meet interest payments in 2017.
Nick Hood, debt restructuring adviser at Opus, the social care analysts, said that the figures show that the debt laden model, which demands an unsustainable level of return, is completely inappropriate for social care.
Although Terra Firma has taken a £450m loss on Four Seasons, it posted a pre-tax profit in January and a sale of some of the more profitable care homes it still owns is under way. Meanwhile, HC-One, the UK’s largest care home operator, has paid out at least £48.5m in dividends in the past two years despite warnings that local authority funding cuts had brought the sector to the brink of a financial crisis.
Understanding where taxpayers’ money is going is essential if Britain is to resolve the funding crisis in elderly care. This is made difficult by the companies’ complex, multi-layered offshsore private equity structures.For instance, HC-One has about 22,000 beds and 340 care homes in a corporate structure with around 50 companies, registered offshore either in the Cayman Islands
or Jersey and a further five in the UK as foreign entities.
In the meantime, 40,000 family homes a year are being sold to pay for care and over a million people are waiting for care which local authorities are finding more and more difficult to provide.
Information from Financial Times, 18 July 2019This entry was posted in Uncategorized.