Health and Care Bill

Baroness Pitkeathley Excerpts

Lords Hansard - Part 2 & Report stage
Monday 7th March 2022 Lords Chamber

[The Deputy Speaker (Baroness Pitkeathley) (Lab)]

My Lords, the noble Lord, Lord Howarth, is taking part remotely. I invite him to speak.

[Lord Howarth of Newport (Lab) [V]]

My Lords, I congratulate the noble Baroness, Lady Bennett of Manor Castle, on bringing back this issue on Report; I was sorry not to be able to speak in Committee. We must also be grateful to the academics at the University of Surrey who followed the money and, a year ago, published their exposé, Careless Finance.

The noble quartet of the noble Baronesses, Lady Bennett, Lady Brinton, Lady Tyler and Lady Altmann, has previously provided the House with an excellent analysis of predatory financial manipulation of the social care sector by hedge funds and offshore entities. I just want briefly to underline certain points.

What we have been seeing is legalised theft. Financial operators are leeching, for their own profit and benefit, substantial proportions—16% to 20%—of the funds provided for social care by both the public purse and self-funding individuals; “grey gold”, the profits thus extracted are sometimes called. This racket, unacceptable at any time, has been perpetrated during a period when the Government have chosen to underfund social care lamentably. Because sufficient budgets are not available to local authorities, many people who should be eligible for social care are not receiving it and many who are in social care are experiencing threadbare services. The workforce is depleted and miserably paid.

It is in the context of this crisis that unscrupulous operators have been ripping off a broken system. In their greed they are putting the business survival of providers at risk. As Christine Corlet Walker, Angela Druckman and Tim Jackson of the University of Surrey have reported, we have been seeing a large-scale transfer of money from the poorest to the richest. As they say,

“the ongoing cost is the silent tragedy of the most vulnerable in society.”

Meanwhile, the Government have made little or no effort to address the problem, which indeed they do not appear to acknowledge exists. The noble Earl, Lord Howe—for whom personally I have great regard—in his response on behalf of the Government in Committee, said that the noble Baroness’s amendment to improve transparency was not proportionate or necessary. He suggested that the Care Act 2014 and the CQC’s market oversight scheme should take care of any problems. However, since the abuses continue, it is obvious that these policies have been ineffectual with regard to them.

The noble Earl also said that it was for local authorities to shape, oversee and manage the market, but only the Government can act to close opportunities for rogue investors to carry out these abuses. He suggested that BEIS was on the case, but BEIS has been inexcusably dilatory.

The Government claim to be fixing social care, but all they are doing is providing a meagre and delayed increase in funding for social care by dint of imposing extra tax on the poor. The only reform they are truly interested in is to relieve the affluent of the need to sell their homes to pay for care.

Even the Government are now exercised about the abuses by Russian kleptocrats. So too they should be very seriously exercised by the abuses of the social care system by unscrupulous investors. Can they not see the evils that have flowed from marketising the social care sector? As the noble Baroness has just said, on Wednesday, the House will debate the Economic Crime (Transparency and Enforcement) Bill. We should also be debating an overdue “social care financial abuse (transparency and enforcement) Bill”, brought forward by the Government.

[The Deputy Speaker (Baroness Pitkeathley) (Lab)]

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

[Baroness Brinton (LD) [V]]

I thank the noble Baroness, Lady Bennett, for tabling these amendments, slightly amended from Committee, and in particular for responding to the Minister’s concerns that the first amendment had perhaps been too broad and would catch the day-to-day business of companies. That cannot be said about Amendment 145.

I also want to pick up a point that the noble Earl made in Committee. He said:

“A company’s working capital, by its nature, is money that is used to fund day-to-day operations in general, and one cannot associate a particular pound with a particular business activity.”—[Official Report, 4/2/22; col. 1161.]


Yet the Charity Commission does have the ability to intervene in the event that a charity, or series of charities stretches—shall we say?—those rules. Its Internal Financial Controls for Charities, CC8, provides very specific guidance. Indeed, in recent years, one charity, the Plymouth Brethren Christian Church, was investigated for a circular set of donations. Each donation to each different body was paid tax relief out of the public purse, coming back to serve the schools that the adults at the community church sent their children to. The way that was structured was similar to a financial instrument employed by the few companies that abused the funding they received from the public purse for social care.

The noble Earl also referred to the Treasury guidance Managing Public Money and Accounting Officer Assessments. I have been through that, too. It is very interesting and clear. Under the heading

“expenditure which may rely on a Supply and Appropriation Act”,

Managing Public Money lists

“routine administration costs: employment costs, rent, cleaning etc … lease agreements, eg for photocopiers, lifts”.

It does not say: “Re-charging sister/parent/daughter companies for large amounts of borrowing and the interest thereto”, which is what has been happening.

It is important that we start to debate how public funding is spent by these companies, particularly those overseas, when we cannot see how that money is spent. I also support the other amendments in the group, which ask for a review of financial regulation. It is interesting that the Treasury guidance refers constantly to the Nolan principles, which are absolutely vital in talking about transparency and responsibility when spending public money. These amendments might not be quite right to deliver that, but it would be good if there were a review under way.

The other thing we must have when these companies spend large amounts of public money is publication of their full accounts. They should not be able to hide behind very short, superficial accounts from overseas.