Because of corporate greed and meanness

The Herald

Headlining in the Herald today:

SOCIAL care in Scotland is at “very real risk of collapse” this winter amid rocketing insurance premiums and a workforce exodus, MSPs have been told.

Donald Macaskill, chief executive of Scottish Care, warned that the sector is now “haemorrhaging” staff to better-paid and less stressful jobs in retail and hospitality, and the coming months will see “more and more providers going to the wall”.

https://www.heraldscotland.com/news/19711602.warning-social-care-scotland-very-real-risk-collapse/

Macaskill is one of the more trustworthy voices in this but I fear he’s not giving us the full picture on the root cause of any exodus or closures – greedy owners.

TuS regular stewartb wrote this for us in June 2020:

Image Saatchi Art

By stewartb

As certain care home owners continue to seek media profile for complaints against government, notably in Scotland but indeed elsewhere in the UK, it seems appropriate for the TuSC to continue to provide information on the nature of this commercial industry.

Despite ‘complaint’, the care home market in the UK still seems to be attractive to private sector investors. When looking at the longer term fundamentals of market demand and supply, it is probably not surprising!

According to specialist advisor One Touch Investment (OTI) : “the UK has an ageing population; care for the elderly already generates an income in excess of £14.5 billion for the UK economy every year, the majority being funded by the government.” (with my emphasis)

Source: https://www.onetouchinvestment.co.uk/news/care-home-investment/uk-care-home-market-worth-investing/

OTI sets out evidence on projected long term, sustained increase in demand for care homes in the UK. It explains how government is (arguably, has to be at least to a degree) committed to finance the care of those without financial assets.  So we have a ‘market’ with increasing demand for critical services and a ‘public’ buyer with little choice but to pay to meet the demand: the commercial attraction becomes clear!

The same source provides this as further background: “The National Health Service in the UK has been reducing capital and seeking out private partners to develop and manage care homes. Virgin Care entered the market in 2010, and over the past six years has been awarded contracts worth more than £1billion and runs over 200 NHS services. So private companies are developing and managing the care homes. The government will pay the bills – where the people can’t afford to.”

(For some indication of Virgin Care’s share of the health and social care market in England see: https://virgincare.co.uk/services/ )

We are also told by OTI that: ‘High yielding, hands off investments like care homes and student accommodation investments have been very popular with overseas investors because they are fully-managed and pay regular income’ says investment director, Arran Kerkvliet, at One Touch Property; a specialist property broker in London that sources well-researched property developments for global investors seeking to diversify their income.’ 

Of course all parties to these care home investments – underpinned by the safety net of government paying residents’ bills – will be extracting value for their own benefit. And the value created is not only being extracted by UK residents but extracted often by overseas interests.

‘Helpfully’ the potential investor is alerted by OTI to the ‘risks’ in care home investment: “Nursing care, qualified nurse shortage. Inflation and minimum wages driving costs up. This is why those leases are only 8%Net.”   Those bothersome minimum wages …!

Care home investments are now being viewed as an alternative to serviced apartments and holiday lets for individual investors. As OTI explains: “… AirBnB profits have plummeted significantly due to the Coronavirus pandemic leaving people unable to travel. Investors were previously attracted to the idea of serviced apartment investments due to the high yields they offer. Short term stays are able to command higher daily rental fees and this converts into higher rental yields. Although as we have seen, they are not immune to the change in the economic and daily landscape of the UK.”

“One alternative where the fundamentals are not affected by outbreaks or economic downturns are care home investments. The ageing population in the UK creates an underlying need for care home beds, and the governments failure to provide an adequate supply means that there is a sustained demand for investors to plug the gap.”  So in effect UK government policy has been creating an attractive commercial market which permits value extraction including by rentiers, and including ones based outside the UK!

And finally for now: “These (this class of care home investments) work similarly to serviced apartment investments in that they are classed as commercial property so no stamp duty is applicable under £150,000. They are generally bought on a 25-year commercial lease where a yearly return is underwritten in the contract. We (OTI) source care homes that are fully operational and have been successfully operating for years. We analyse the financials to decide whether the returns stack up. Often guests are self-funded although if they do not have enough capital to fund their stay then the government supports them, allowing for a constant rental income and occupancy.”  Or to put this another way, the taxpayer via government mitigates the investors’ financial risk!

There must surely be better ways than this to look after the elderly and vulnerable! Of course we should expect commercial care home interests to marshal resources to resist change.

More at:

https://socialistworker.co.uk/art/41916/Billions+made+from+care+home+crisis

The Herald

2 thoughts on “Because of corporate greed and meanness

  1. There is a shortage of care workers, mostly due to Brexit. Many care workers were from EU, all gone now, and it’s generally not a well paid job when it should be one of the highest paid. It’s a topsy turvy world, with the wrong folk paid stupidly high amounts, those caring for others, not so much.
    The Britnat media love a good crises story about Scotland don’t they.

    Liked by 4 people

  2. The Tories see this as a bump in the road on their destination to a zero welfare state.
    They haven’t managed to shift care responsibility entirely to the private sector yet but at the same time are reducing funding to the public one.
    Another factor is that the Covid pandemic has exposed the private sector’s penchant for avoiding regulations which hits their bottom line.
    Having to conform makes the “enterprise” less attractive to investors.
    Shifting responsibility to others has become the Tory modus operandii so they will continue to ensure that they are not accountable for the huge challenges of providing care to an ageing population.
    These should be decisions for society as a whole but seems to have been reduced to the preserve of a small group of people in the clubs of London.
    London rule.

    Liked by 2 people

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.