Social Care Sector: Private Equity

Baroness Wheeler Excerpts

Thursday 27th January 2022 Lords Chamber

[Lord Kamall (Con)]

The noble Lord makes an important point about the level of debt, but I am sure he is aware that a number of private companies operate with levels of debt. As we saw in the financial crisis, the issue is whether that debt is sustainable. The noble Lord, Lord Sikka, who is an accounting standards expert, understands all of the issues around IFRS 9 and all of the downsides to that when sufficient provision is not made for debt.

[Baroness Wheeler (Lab)]

My Lords, the Minister’s predecessor in this role repeatedly told the House that there was nothing wrong with the business model for the care home sector, despite record numbers of closures—particularly of small, independent homes, which are the backbone of residential care—and the dire financial problems that they face, with councils unable to pay going rates for staff pay and residents’ fees. This is all compounded by the pandemic. The Centre for Health and the Public Interest estimates that around £1.5 billion leaks out of the health system each year, listed as

“dividend payments, net interest payments out, directors’ fees, and profits”.

Should this not all be going to front-line patient care?

[Lord Kamall (Con)]

We believe that the quality of care that patients receive is really important—