National Health Service Commissioning Board and Clinical Commissioning Groups (Responsibilities and Standing Rules) (Amendment) Regulations 2020

Lord Sheikh Excerpts

Monday 8th June 2020 Lords Chamber

[Lord Sheikh (Con) [V]]

My Lords, I will talk about the financial aspects of the care home industry, and what needs to be done after the pandemic to ensure its sustainability.

There are more than 420,000 people in care homes; there are more than 22,000 care homes; and the industry generates an annual income of about £15 billion. I pay tribute to the industry, as it has performed well under the circumstances during the pandemic. We need the sector to be stable, as we have an ageing population and some people have health issues. Care homes are of varied sizes. The smaller companies are normally well managed, particularly if there is involvement by the owners. My suggestion to them would be to curtail their borrowings, be cost effective and, importantly, have adequate reserves. In my business, I have always had adequate reserves. My concern is with the larger companies, which are making over £1.5 billion in profits, with considerable amounts going to hedge funds. There may be complex intercompany structures. It is estimated that a high percentage of the care home industry’s £15 billion income is leaked and goes towards the payment of rent, dividends, loans and directors’ fees, not towards front-line care. The situation is opaque and there is reluctance to inject money into the sector, as there may be structural complexities.

Despite the high income generated by the industry, the staff are among the lowest paid workers, with a high turnover. It is hoped that the more money that goes to front-line care the better paid the staff will be. In the last 10 years, Southern Cross and Four Seasons have failed. I worry that there may be other problems post pandemic. The care home sector’s revenue comes from local authorities, the residents and the Government. The weekly amount payable per resident is normally between £600 and £800, and the NHS will pay £183.92 or £253.02 per week for nursing care in eligible cases. As there is a contribution from the state, there needs to be transparency and accountability and we must ensure financial stability. We should, therefore, perhaps consider some form of legislation to achieve this.

Finally, my own business—insurance—is properly controlled and regulated. Would my noble friend the Minister like to comment on the issues I have raised?