The Care Crisis by Emma Dowling

Author:Emma Dowling [Dowling, Emma]
Language: eng
Format: epub
Publisher: Verso Books

Locating the Eye of the Storm

According to the Care Quality Commission, the perfect storm in adult social care is due to a combination of increases in demand, workforce shortages and access problems exacerbated by funding gaps.72 However, developments in the corporate care home and homecare sectors suggest that this is not the whole story. Recent years have seen at least two high-profile cases of financial collapse among the large corporate chains.73 In 2019, all four of Britain’s biggest care home providers, each operating hundreds of care homes across the country, were up for sale and struggling to find buyers.74 In 2011, the private for-profit provider Southern Cross collapsed because it could no longer keep up the payment of annually rising rents for the care home properties.75 HC-One, founded from the collapse of Southern Cross and itself owned by a consortium of international investors, has more recently warned of financial troubles, despite having paid out £48.5 million in dividends in the preceding two years.76 In 2019, Britain’s biggest care home chain, Four Seasons, was one of those in severe difficulty. Falls in profits meant that Terra Firma, the private equity firm that owned the chain, was no longer able to service interest payments on company debts, although Terra Firma did post a 30 per cent rise in annual pre-tax profit in January of the same year.77 According to reports, Terra Firma had been struggling since December 2017, when it failed to meet a £27 million interest payment.78 Four Seasons was then placed in the hands of H2 Capital Partners, a US hedge fund that is the sector’s biggest creditor.79

In homecare too in recent years, large providers have been leaving the sector.80 In 2017 the outsourcing company MITIE, which had acquired the Enara Group homecare providers for £112 million in 2012, sold its homecare business to the private equity firm Apposite Capital after repeated profit warnings and a write-down of at least £150 million.81 Another outsourcing company, Mears, originally specialising in the maintenance and repair of social housing, stated in the same year that its homecare business was making a £3 million loss.82 Providers have been handing back contracts to local councils and even exiting the market altogether, because they cannot service contracts at the price local authorities are paying.83

Industry representatives blame local authority budget cuts and tightening of eligibility criteria for the problems in social care, along with increases in the minimum wage, the lack of new contracts and tighter immigration rules post-Brexit, and problems with staff retention.84 There is broad agreement that more public funding is required: the Competition and Markets Authority Report identified an absolute minimum funding gap of £1 billion for social care in 2018.85 Care England, the body that represents providers, has even suggested that four times that sum would be needed to stabilise the social care sector.86 For all intents and purposes, it seems like not enough money is being made available for contracts to be serviced and that, hence, the problem is austerity.

A 2018 report

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