Think tank calls for 'OfCare' regulator to stop growth of debt-fuelled care providers

A leading think tank is calling for a ‘powerful' national financial care regulator – OfCare – to oversee the financial regulation of ‘systemically important’ care providers and halt the growth of debt-fuelled care home providers.

Labour leader Jeremy Corbyn. Credit: BBC

A report by the Institute of Public Policy Research (IPPR) called ‘Who Cares? The financialisation of adult social care’ warned: ‘We need to be bold and arrest the growth of debt-fuelled private providers in social care’ with policy interventions that will also oversee the existing sector.

The think tank states larger care home providers are becoming more dominant with 84 per cent of beds now provided by the private sector - up from an estimated 82 per cent in 2015.

It also warned a growing reliance on private provision is linked to less staff training, higher turnover and lower pay.

The IPPR report is based on data analysed in collaboration with Future Care Capital (FCC).

'Complicated corporate structures'

The report stated the largest care providers ‘rely on high levels of borrowing, complicated corporate structures and cost-cutting measures such as tax avoidance and low staff pay’.

The think tank wants to see requirements put in place to ensure state-funded providers maintain a ‘safe’ level of reserves and demonstrate they are all paying their fair share of tax in the UK.

The IPPR's report also highlighted that ‘the emergence of large private providers contrasts with evidence that small nursing and residential homes provide better care’.

Referring to research by the Care Quality Commission, the think tank highlighted a link between the size of a provider and quality of provision.

Some 89 per cent of both small nursing and residential homes were rated as good or outstanding by the CQC, compared with just 65 per cent and 72 per cent of large nursing and residential homes respectively, according to the CQC’s 2017 report. Some 13 per cent and three per cent of beds are provided by the voluntary and public sector respectively.

Government urged to create 75,000 more beds to reassert state's role in social care

The IPPR has now called on the government to reassert the state's role in social care by borrowing £7.5 billion to provide an extra 75,000 beds by 2030. By doing this it argues, the government could address the issue of so-called ‘care deserts’.

The think tank recommends care for these new care homes provided by the state (either through the local authority or the NHS) or by not-for-profit providers and commission innovative providers.

There are over 24,000 registered care providers in England. Under the Care Act 2014, local authorities have a statutory duty to support the development and sustainability of markets for social care services.

This includes a market oversight function, which involves actions to monitor the performance and finances of social care providers in order to predict and prevent provider failure and the consequences for older people.

Local authorities are not paying care home providers enough for care, with funding cuts fuelling a social care crisis, a fact highlighted by care providers.

As well as the impact of funding cuts, the IPPR report's authors Grace Blakeley and Harry Quilter-Pinner stated in the report ‘We need to recognise the role that the ownership and business models of these big residential care providers have played in the growing instability of the care home sector.’