Southern Cross

Baroness Barker Excerpts

Thursday 16th June 2011 Lords Chamber

[Baroness Barker]

My Lords, after 13 years of a Labour Government who were not in any way reluctant to diversify the residential care market, there is an even greater plurality of providers than there ever was before. One issue that has arisen out of this case is the capacity of the CQC to evaluate the stability and viability in the long term of a company that is owned by a private equity firm. That is a complex task that might challenge even the Financial Services Authority. Does the Minister agree that in order to reach the stable and viable market that he has suggested, there is a need to look at this in a much wider sense than just this case? Does he agree that the discussions that must inevitably follow the publication of the Dilnot inquiry in July should focus on the role of private equity-funded companies in the residential care market and, as he has also suggested, in the domiciliary care market?

[Earl Howe]

My noble friend raises an important issue. As she knows, care providers have to be able to demonstrate to the Care Quality Commission that they have the financial resources needed to continue to provide services of the required quality. We have embarked on a wide-ranging programme of reform for social care. We are currently considering the Law Commission’s recommendations for modernising social care law and, as my noble friend mentioned, the report of the Commission on Funding of Care and Support is imminent. There are many lessons that have to be learnt from the events of recent weeks. We want to reflect on them as part of our wider reform agenda for social care.

On private equity finance, I simply make my own observation to my noble friend: I do not think that private equity finance is at the root of the problems that we have been seeing but the business model, which is rather a different issue. It was the choices and decisions made by the management of Southern Cross that made the business fundamentally unsustainable. I do not see that as a reflection directly on private equity providers. We have been clear that we were going to take action to ensure that there was proper oversight of the market in social care. That is why the Health and Social Care Bill specifically allows us to extend to social care, if we chose to do so, the proper financial regulatory regime that we are putting in place for the NHS. However, I suggest that regulation is not the only solution; we need to approach this in a measured way, not least because there are complex negotiations under way. We need to look at social care reform as a whole, which is exactly what we have committed to doing.