Why should Scottish Government help tax-avoiding corporations to pay care workers a decent wage?

From BBC Reporting Scotland this morning:

A growing pay gap between NHS and social care workers has to be urgently addressed in order to avoid a catastrophe in the sector. That’s according to social care providers, who say pressures on them mean around one in six patients in hospital cannot get out. A 6.5% pay rise for NHS staff like nurses and nursing assistants doesn’t extend to social care workers. The Scottish Government say social care has felt the impact of Brexit, the pandemic and energy price rises, and extra funding has helped deliver tow pay rises in two years.

We are seeing already providers who are having to hand back hours of care to health and social care partnerships, to local councils because they don’t have the resources to offer that. That is not OK. We need a much more laser-like vision from Scottish Government and pretty much the equivalent of what they are giving to our NHS, they need to be giving to our social care providers.

Who are the members of this coalition that Rachel Cackett, above, represents and who expect extra money to pay their workers?

They’re, in the main, corporations and other, privately owned, for profit businesses, operating with a free-market system they claim to embrace and which has enabled most to make massive profits over decades – cash cows.

Stewartb wrote this for us in 2020:

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 marshall resources to resist change.

On tax avoidance, see:




4 thoughts on “Why should Scottish Government help tax-avoiding corporations to pay care workers a decent wage?

  1. The Scottish Government’s response should be to offer to take the sector back into public ownership. at minimum cost given they present their operations as bankrupt and failing to generate revenues, this to relieve the sector from their burden. Most private providers are based in UK Tax havens.

    Liked by 2 people

  2. Ahh, what we all knew from the start , the private nursing homes cannot cope , they only want to pay low wages to staff because shareholder profit is their highest priority and yes of course patients suffer , staff are hard to get and harder to retain.
    Scottish government should as Ian Stewart says here offer to take the care sector back into public ownership, i remember when Thatcher privatised it she shut down many council care homes and there was a free for all with some people trying to run bed and breakfast establishments as registered care homes of course there were disasters and over the years many deaths and cases of I’ll treatment by staff totally unsuitable and unqualified for the job, so so sad for all those patients and relatives involved , gradually the market settled into what we have now which is big corporations that aim low pay low because profit for shareholders is the highest priority.

    Liked by 1 person

  3. It’s all to do with the continuing propaganda campaign, tellingly “We need a much more laser-like vision from Scottish Government….”, one of these daft modern re-interpretations of “laser-focus”.

    The bulk of Scotland’s privatised care sector was imposed by the Tories along with ensuring corporate profits went to tax-havens…
    I don’t hear Rachel Cackett calling on the corporations to pay back any of their vast profits to staff…

    There will undoubtedly continue to be a role for the private care sector in an independent Scotland, but the Tory methodology won’t be governing it….


  4. Care for the elderly should be an integral part of the NHS/Social care sector. Those who wish/need Private Care, and can afford it, should of course have access to it.

    As a side-bar, I seem to be unable to “like” either the article or comments…think it’s a WordPress issue..?


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