April 21, 2021

Jason Ward

Care homes should be subject to far greater transparency and community oversight, especially in light of covid-19 deaths.

The covid-19 pandemic has renewed the urgency of reforming the care sector around the world. With nearly 38,000 covid-19-related deaths of care home residents from March 2020 to early February 2021, the UK is no exception. The failings of the UK care sector will be further exacerbated by an ageing population. The percentage of the population aged 65 and over is expected to rise from 18% to 23% by 2033.Greater life expectancy and higher acuity levels will significantly increase the degree of care needed to maintain dignity for older people, and there is already an estimated annual funding gap of £2.5bn.

Emerging evidence from other countries—including Australia, Canada and the US—suggests that higher rates of return on investments have been pursued at the expense of care, leading to thousands of unnecessary and preventable covid-19 deaths. At least 84% of care home beds in England are owned by private companies, and the four largest operators are owned by private equity firms. In the UK, the government has protected private interests and not disclosed the names of care homes where covid-19 deaths have occurred.

On March 4th 2021, the UK’s Housing, Communities and Local Government Committee launched a new inquiry to investigate the impact of covid-19 on the adult social care sector and its long-term funding needs. The statement announcing the inquiry noted that in 2018-19, the sector accounted for 41% of local authority expenditure. This level of local public funding is inadequate to meet current needs and continues to grow at an unsustainable rate. Within the current funding model, local authority spending on the care sector crowds out funding for other essential services. As a result, local businesses and communities suffer while inequality increases.

Although funding is critical, the bigger problem appears to be the lack of political will to address clear structural problems across the sector. One of the key issues is the urgent need for greater transparency from private operators and accountability in government spending. This lack of political will was made apparent in the recent UK budget: the British chancellor of the exchequer, Rishi Sunak, proposed an increase to the corporate tax rate but made no mention of the need for increased funding for the care sector.

As a starting point, the budget could have included a dedicated “Social Care Premium”—which was already proposed in the previous Parliamentary report. That report found that a 1% increase on corporate tax would raise an estimated £2.6bn while a 13% “Care duty” wealth tax would raise an estimated £4.8bn in 2020-21. Both of these national funding sources for a “Social Care Premium” must be considered. An increase in national funding is urgently needed to improve and expand social care services and to alleviate pressure on local authorities. In March 2021, after a two-year review, the final report of Australia’s Royal Commission into Aged Care recommended a dedicated aged care levy, mandated levels of staffing and increased transparency and accountability to improve conditions across the sector.

In order to restore public confidence and gain broad support for dedicated national funding for social care, steps must be taken. Emerging evidence suggests that some care sector operators are extracting profits, from both public funding and private pay, without delivering quality services. Increased transparency of finances, corporate structures, ownership and direct spending on care must be mandated as a condition of public funding. Currently, major operators demand more funding while dividends and rents are sent offshore.

A recent analysis of UK care home chains showed that all properties were owned via shell companies in Luxembourg, Jersey and Guernsey. Offshore investors and shareholders benefit from these returns while UK operating companies report losses and even generate tax credits.

Care homes should be subject to far greater transparency and community oversight. In cases where operators fail to provide adequate care, consideration ought to be given to whether care homes should be transitioned back to local authorities. Greater integration with the NHS, as recommended in the previous parliamentary report, should also be considered to avoid inefficiencies in a fragmented system. Rationalising care delivery and expenditure would not only provide older people with the dignity and respect they deserve, it could even save money. 

To see the full article at EIU, click here.