Social Care Sector: Private Equity

Lord Sikka Excerpts

Thursday 27th January 2022 Lords Chamber

Asked by

[Lord Sikka]

To ask Her Majesty’s Government what assessment they have made of the impact of private equity on the social care sector.

[Lord Sikka (Lab)]

My Lords, I beg leave to ask the Question standing in my name on the Order Paper and draw attention to my interests in the register, which states that I am an unpaid adviser to Tax Justice Network.

[The Parliamentary Under-Secretary of State, Department of Health and Social Care (Lord Kamall) (Con)]

Under the Care Act 2014, it is the responsibility of local authorities to shape their local markets, which are largely made up of privately owned and third sector services. No assessment of the impact of private equity on the sector has been made, but, as of December 2021, 84% of care providers are rated “Good” or “Outstanding”. The market oversight scheme mitigates the risk of a sudden failure of potentially difficult to replace care providers.

[Lord Sikka (Lab)]

My Lords, I thank the Minister for that reply, which is really unsatisfactory because private equity is a disaster for the care home sector. To take one example, HC-One, which is the largest care home operator, is siphoning off 20% of its revenues to offshore affiliates through intra-group transactions, leaving very little for front-line services. Since 2011, it has declared a loss every year except one and paid no corporation tax but paid dividends of £48.5 million. Can the Minister explain why the Government tolerate such abuses? When will there be an independent inquiry?

[Lord Kamall (Con)]

We value the role of independent and third sector care homes. It is important that we have that right mix. Some private companies will include private equity, and it is important not to tar all private equity with the same brush. Private equity plays a role in many companies in turning them around and retaining jobs. The important thing for us is that, if any companies are potentially in financial trouble, we have the market oversight scheme to ensure that, if they go bust, there is an ability to transfer patients elsewhere.