National Health Service Commissioning Board and Clinical Commissioning Groups Regulations

Posted by Lord Sheikh

My Lords, I will talk about the financial aspects of the care home industry, and what needs to be done after the pandemic to ensure its sustainability.

There are more than 420,000 people in care homes; there are more than 22,000 care homes; and the industry generates an annual income of about £15 billion. I pay tribute to the industry, as it has performed well under the circumstances during the pandemic. We need the sector to be stable, as we have an ageing population and some people have health issues. Care homes are of varied sizes. The smaller companies are normally well managed, particularly if there is involvement by the owners. My suggestion to them would be to curtail their borrowings, be cost effective and, importantly, have adequate reserves. In my business, I have always had adequate reserves. My concern is with the larger companies, which are making over £1.5 billion in profits, with considerable amounts going to hedge funds. There may be complex intercompany structures. It is estimated that a high percentage of the care home industry’s £15 billion income is leaked and goes towards the payment of rent, dividends, loans and directors’ fees, not towards front-line care. The situation is opaque and there is reluctance to inject money into the sector, as there may be structural complexities.

Despite the high income generated by the industry, the staff are among the lowest paid workers, with a high turnover. It is hoped that the more money that goes to front-line care the better paid the staff will be. In the last 10 years, Southern Cross and Four Seasons have failed. I worry that there may be other problems post pandemic. The care home sector’s revenue comes from local authorities, the residents and the Government. The weekly amount payable per resident is normally between £600 and £800, and the NHS will pay £183.92 or £253.02 per week for nursing care in eligible cases. As there is a contribution from the state, there needs to be transparency and accountability and we must ensure financial stability. We should, therefore, perhaps consider some form of legislation to achieve this.

Finally, my own business—insurance—is properly controlled and regulated. Would my noble friend the Minister like to comment on the issues I have raised?


Baroness Bennett of Manor Castle, in her speech included the following paragraph: 

I am picking up on points made earlier by the noble Baroness, Lady Tyler of Enfield, and the noble Lord, Lord Sheikh, about the 84% of care homes which are privately owned and what you find when you peel back the layers of that. I first got interested in these issues in 2016 when I read a brilliant report by the Centre for Research on Socio-Cultural Change called Where Does the Money Go? Financialised Chains and the Crisis in Residential Care. It exposed for the first time to full public view the way in which large numbers of care homes are owned by offshore-based companies with complex financial structures which extract 12% or even more annually in effective profit, however it is structured, while ensuring that little or no tax is paid and loading companies up with debt. All that provides care of a sort for our most vulnerable and often frail citizens while the work is done by lowly paid and often insecurely employed staff, treated with scant respect.


The Parliamentary Under-Secretary of State, Department of Health and Social Care, Lord Bethell, also included the remarks:

We all recognise that many of the lowest paid, many of them BAME, put themselves in harm’s way to look after the most vulnerable. The noble Lord, Lord Sheikh, and the noble Baronesses, Lady Pinnock, Lady Uddin, Lady Sheehan and Lady Jolly, made these points very well. For this sacrifice the country is enormously grateful. In particular, since this is Carers Week, I give special thanks and appreciation to our nation’s carers.

The noble Baronesses, Lady Tyler and Lady Bennett, and the noble Lords, Lord Sheikh and Lord Mann, asked about the significant extra funding that the Government had provided. I confirm that the Government expect local authorities to get the funding that they have received to the front line quickly. Local authorities should take steps to protect providers’ cash flows, including making payments on plan in advance and monitoring the ongoing costs of care.


Link to the full debate on Hansard.

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