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

Baroness Altmann Excerpts

Monday 8th June 2020 Lords Chamber

[Baroness Altmann (Con) [V]]

My Lords, I welcome the opportunity to debate the social care sector, and I welcome the increase in rates that the NHS and CCG commissioning authorities will pay for nursing care. I congratulate the noble Lord, Lord Hunt, and echo some of his comments about the sector. What assessment have the Government made of the financial stability of firms promising to house the most vulnerable elderly citizens of our country for the rest of their lives? Is the department looking into the financial strength of care providers, with a view perhaps to reforming how they are funded?

The Centre for Health and the Public Interest’s 2019 study of 830 adult care homes found that 18 of the 26 biggest providers had corporate structures that separate the firm running the home from the ownership of the buildings, representing an estimated £1.5 billion of leakage in fees to pay interest, profit or rent. For the biggest five private equity-owned providers, the cost of debt per bed represented 16% of the weekly fee.

These operators are highly geared with expensive debt, following a number of corporate transactions that would not be permitted in many other areas. If you promise to pay somebody an annuity for the rest of their life, there are strict financial reserving requirements to back that, but it seems that when operating a care home, there are no such financial requirements. Indeed, there is a precarious position, particularly after the recent crisis, because care home operators were not paid enough to cover the costs of keeping people in their care home by local authorities, and therefore private payers—self-funders—had to cover the underpayments.

Is my noble friend aware of the recent study which showed that councils were paying private providers less than £500 per week, but that in the same local authority commissioning groups were paying £720 per week for a home run by councils? Therefore, there are significant differences in the amount that councils will pay for the same type of care. The regulator is supposed to ensure that council commissioning offers fair rates to care providers, but they are now struggling to make ends meet, particularly with the extra costs of PPE and so on forced on them by this crisis. Could my noble friend comment on this situation?