Social Care Industry Increasingly Relying on Private Sector

The private sector is responsible for providing 84% of beds for people in residential social care.

This is up from roughly 82% in 2015, according to a new report from think tank IPPR.

A further 13% of beds are provided by the voluntary sector, while just 3% are provided by local authorities and other public sector organisations.

Problems with the big five

The report also found that the five largest providers are responsible for almost one-fifth of all social care provision. Four of these are owned by private equity firms, which is one more than in 2016.

According to IPPR, the increasing “financialization” of the social care sector has seen these businesses “rely on high borrowing, complex corporate structures and cost-cutting measures such as tax avoidance and low staff pay”. This then leads to them becoming unstable.

The think tank pointed out that two of the big five providers have gone into administration in the last decade, with this happening to Southern Cross in 2011 and Four Seasons in 2019.

Factors affecting lower quality care

IPPR has identified three specific factors it says can lead to a lower quality of care from private care home providers: workforce; instability and size.

According to previous research by IPPR, evidence shows that private providers employ fewer staff, as well as offer lower pay and less training. As a result, these firms see higher staff turnover. The think tank pointed out that studies by the Care Quality Commission, as well as other organisations, have revealed the link between the size and quality of a workforce and the quality of social care they can provide.

In terms of instability, the report pointed to the fact that three-quarters of local authorities have said they have had care providers closing down in the past year. This is up from two-thirds the year before. IPPR said this partly down to “downward pressure on fees local authorities can afford to pay”, but it also reveals a “growing reliance on debt within the sector”.

Size has been found to have a significant impact on the quality of care provided. According to IPPR, the smaller a care home is, “the more likely it is to provide good care”. In addition, the CQC has rated 89% of small residential or nursing homes as good or outstanding. This is compared to just 65% of larger homes and 72% of large homes.

However, the number of beds in small care homes has fallen in 91% of local areas since 2015. Just 25% of beds are now found in these homes.

Ending the ‘care home crisis’

Along with the report, IPPR has called on the government to implement a number of changes to take these problems on and ensure the care sector is overseen effectively. This includes the creation of a powerful care regulator – OfCare – to oversee financial regulation of larger providers.

It also urged the government to force state-funded care providers to maintain a minimum safe level of reserves and that they show that they pay the correct amount of corporation tax in this country. In addition, it has recommended that the government build enough new care homes to provide the 75,000 beds that will be required by 2030.

Furthermore, IPPR called on the government to ensure that the care provided by these homes is done so directly by the state or purchased from not-for-profit local providers.

Harry Quilter-Pinner, senior research fellow at IPPR and lead author of the report, said: “The social care crisis is about more than just money. We need radical reform in who provides care and how they do this. Over the last few decades care the state has handed over the responsibility for care to the private sector. Too often these firms put profits before people.

“That’s why we need a new financial care regulator to ensure better monitoring of care providers financial health, and a commitment from the government to increase the share of residential care directly provided by the state, partly through borrowing to build the care homes of the future. It’s time to end the care home crisis.”

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