Social Care Sector: Private Equity

Lord Browne of Ladyton Excerpts

Thursday 27th January 2022 Lords Chamber

[Lord Kamall (Con)]

What is important is to make sure that we have continuous and high-quality care for patients. Therefore, where there are concerns about the financial stability of any company, whether it is funded by private equity or otherwise privately owned, it is important that we have a system to make sure that we manage that. If a company goes under, there is the ability to transfer patients to high-quality care. The important thing for us is the quality of care for patients—it is important that we put patients first.

[Lord Browne of Ladyton (Lab)]

My Lords, last year, during the pandemic, the business that my noble friend has referred to, HC-One, paid 10%—nearly £5 million, tax free—of those dividends to its financial controllers, who are holed up in the Cayman Islands. At the same time, it was given almost £20 million from the Government’s infection control fund to help it through the pandemic. Clearly, people’s pockets are getting picked here. If ever anything called for an independent inquiry, it is this behaviour by private equity businesses. Such behaviour is concerning the Bank of England: the Financial Stability Report shows that the level of leveraged debt that these businesses have is a threat to our economy.

[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.