BREAKING NEWS: Government urged to tackle growth of debt-fuelled private social care


A leading thinktank has urged the government to tackle the growth of debt-fuelled private firms providing social care.

In a briefing paper, the IPPR calls for “radical reform” of social care provision and warns of “growing financialization”, with one-fifth of the sector run by five providers, of which four are owned by private equity.

The IPPR said: “This growing ‘financialization’ of the sector has seen these organisations rely on high borrowing, complex corporate structures and cost-cutting measures such as tax avoidance and low staff pay, which makes them potentially unstable.”

The thinktank highlights the administration of Southern Cross in 2011 and Four Seasons this year as evidence of financial instability.

More than four-fifths of residential care (84%) is provided by the private sector up from an estimated 82% in 2015, with 13% provided by the voluntary sector and 3% by local authorities.

The briefing paper urges:

  • the creation of a new regulator, Ofcare, to oversee the financial regulation of medium and large providers;
  • compelling all state-funded providers to ensure they maintain a ‘safe’ level of reserves and demonstrate they pay a fair share of corporation tax; and
  • commitment to provide up to 75,000 beds that will be needed by 2030 through borrowing worth £7.5bn.

Harry Quilter-Pinner, Senior Research Fellow at IPPR and lead author of the report, said: “The social care crisis is about more than just money. We need radical reform in who provides care and how they do this. Over the last few decades care the state has handed over the responsibility for care to the private sector. Too often these firms put profits before people.

“That’s why we need a new financial care regulator to ensure better monitoring of care providers financial health, and a commitment from the government to increase the share of residential care directly provided by the state, partly through borrowing to build the care homes of the future. It’s time to end the care home crisis.”

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