Health and Care Bill

Lord McFall of Alcluith Excerpts

Committee stage
Friday 4th February 2022 Lords Chamber

[Lord Ashton of Hyde (Con)]

My Lords, before we commence proceedings on the Bill, I will outline the plan for today. We will shortly begin the eighth day in Committee on the Bill. There is no other business, but we will take a short break around 2 pm. We will sit until 7 pm. At the outset, I thank the staff of the House for supporting this additional lengthy Friday sitting, both those here in the Chamber and those who do the enormous amount of work that goes on behind the scenes to get the House up and running.

I fear that noble Lords know what I will say next. I do not want to deny the House the fullest chance to scrutinise this Bill. As over 40 hours have been devoted to that end, not even my fiercest critics could say that time for debate has been curtailed. However, we still have a lot of amendments to get through. I know, based on the experience of last Wednesday, that good progress can be made. I know that the Front Benches will work to ensure that their contributions are concise and to the point and I hope that all noble Lords will do the same.

We should perhaps bear in mind the late, great Nicholas Parsons and make our speeches without repetition, hesitation or deviation and perhaps for just a minute. This is a self-governing House, so all I can do is ask and implore noble Lords to respect the conventions and courtesies of the House to ensure effective and efficient scrutiny of this legislation.

[The Lord Speaker (Lord McFall of Alcluith)]

My Lords, before calling the first amendment, I indicate that the noble Baroness, Lady Brinton, will be taking part remotely.

Clause 141: Provision of social care services: financial assistance

Amendment 237

Moved by

--- Later in debate ---

[Baroness Bennett of Manor Castle (GP)]

My Lords, I will also speak to Amendments 238 and 239 in my name. Predatory and rent-seeking financial practices by investment firms and hedge funds, which are often based in tax havens and have extremely complex ownership structures, have placed unmanageable financial and human costs on the UK care sector. I first learned about this issue in 2016 from the brilliant Centre for Research on Socio-Cultural Change, which was then based in Manchester but is sadly no longer extant. Since then, the issue has become a staple on the pages of the Financial Times. If any noble Lord does not know about this issue, I urge them to look up “UK social care” on ft.com. They will see there a long string of stories from a publication that does not generally represent my side of politics saying how much of a problem this is.

I also note that, last week, the noble Lord, Lord Sikka, not currently in his place, initiated an Oral Question that highlighted some of the worst abuses in financialised care homes, from HC-One siphoning off 20% of its revenues to offshore affiliates through intra-group transactions to—as was highlighted by the noble Baroness, Lady Brinton, who may raise this again later—the industry average of 16% of the money going not to care but to the financial sector. The crisis is here and was further highlighted by the recent “Panorama” report.

What is lacking, however, and I have been looking for them since 2016, is solutions. How do we change this situation? It is worth pointing out that this is not how things have always been. Back in the 1980s, the NHS was generally known as a world leader for geriatric care, as it was then known, picking up half of the care sector for older people. In 1982, there were only 44,000 private care home beds. By 1994, there were 164,000. The number of charity, non-profit, local authority beds plummeted and the private sector came in or displaced the public.

The amendments to the Health and Care Bill that I am presenting today rely on the work of the All-Party Parliamentary Group on Limits to Growth. Its excellent report covers these issues in much more detail than I have time to do today and I urge noble Lords to look at it. The group worked on and produced these amendments.

Amendment 237 takes what I think could be a deeply dangerous element of the Government’s Bill, which has received little attention thus far. It is the provision allowing for government support of private care facilities. This is not possible now. Amendment 237 would add the provision that these funds cannot be used to make payments on debt obligations for for-profit bodies or in distributions to shareholders—huge payouts that were highlighted in last week’s debate.

However, that takes us further, and it is interesting that the government amendment—I suspect unintentionally—actually gives us a way forward to start to unwind the privatisation, as there is a potential problem. We have already seen two major private care home crashes: Southern Cross in 2011 and Four Seasons Health Care in 2019. When—I will not say if—more crash, how do we start to move towards worker co-operatives, social enterprises, local authority homes and charity-run homes? How do we ensure that people can stay in those homes safely and be cared for, and not see the money siphoned off into offshore tax havens? We can use Clause 141 with this amendment for potentially very positive, even revolutionary, purposes.

Amendment 238 picks up a point that I often make that a foundation for tackling our out-of-control financial sector and ensuring that fair taxes are paid by companies is country-by-country reporting. The amendment requires any related companies within the same corporate group that are registered offshore to be under the same financial reporting and publication requirements as those bodies registered in the UK. That means that expenditure on dividends, directors’ fees, interest payment and similar would have to be fully and transparently declared. I have to ask the Minister: what does he have against transparency in the financial sector? What could the Government possibly have against seeing exactly where the money goes—whether it is the money of older, vulnerable people in our society or the state money that is supporting them? That is all that this amendment does; it demands that transparency.

These two amendments are not a total solution—I do not have a panacea for the situation—but they are a start, and that is why they combine with the third amendment in this group, Amendment 239, which calls for a review. It is a very simple, obvious amendment of a type often seen in your Lordships’ House. I note that I am joining the former Conservative Health Secretary Jeremy Hunt, who also recently called for a review of the funding. We see some unusual alliances in this House; this is an unusual alliance between the two Houses.

As we all know and has just been highlighted, the many hours of this debate have focused on what a mess the care sector is. These are the most vulnerable members in our society, and a significant part of that mess is because money is being siphoned away from their care. We can use the Bill, with these three modest amendments, to start to turn around that situation. I beg to move.

[The Lord Speaker (Lord McFall of Alcluith)]

My Lords, the noble Baroness, Lady Brinton, is taking part remotely. I invite her to speak.

[Baroness Brinton (LD) [V]]

My Lords, I support Amendments 237, 238 and 239 in the name of the noble Baroness, Lady Bennett of Manor Castle, which aim to ensure that private providers are regulated, especially those using obfuscatory financial structures, instruments with inter-company loans and large amounts of debt. They should be fully transparent about those arrangements. She was right to highlight the excellent reporting of the Financial Times on this, along with the financial editors and journalists of other papers.

The typical small business social care home owner does not fall into the category I have just described. The problem in the sector is the private equity providers who decided to start buying up care home groups because they felt that the assets could be milked to provide healthy-looking returns for them. This differs from those homes borrowing in order to, perhaps, buy new homes to enlarge their group; what is happening here is purely financial instruments to benefit the directors and investors. Typically, private equity-backed providers spend around 16% of the bed fee on complex buyout debt obligations. The accounts of Care UK show that it paid £4.1 million in rent in 2019 to Silver Sea Holdings—a company registered in low-tax Luxembourg, which is also owned by Care UK’s parent company, Bridgepoint.

These kinds of buyouts are also associated with an 18% increase in risk of bankruptcy for the target company. In the case of Four Seasons Health Care, heavy debt payments contributed to the company’s collapse into administration in 2019. Two of the other largest care home providers in the UK, HC-One and Care UK, have also undergone leveraged buyouts and, as a result, their corporate group structures remain saddled with significant debts. Some of these types of company are also struggling to provide the best possible care with their overall CQC scores—so it is affecting the lives of the most vulnerable patients.

The Office for National Statistics says that 63% of care home residents are paid for by the public purse. Surely the Government must have a duty towards the public purse. It is not acceptable for the public purse to pay for these complex financial arrangements that are intended to provide not care or capital for the growth of a care business but purely a larger return for directors and shareholders. These amendments would provide for transparency and accountability and an assurance that the public purse and the private payer are not being taken for a ride.