Private capital is skinning the elderly to death in the care home system: social care must be socialised!

8 December 2021

The BBC’s Panorama programme this week made an attempt to expose the racketeering - yes, the “skinning to death” - of working class elderly by private care home companies, which nowadays provide as much as 80% of all residential care.

    We heard that most of this care is provided by just 3 big companies - Four Seasons, HC-One, and Care UK. And that out of the £1,000/week paid per resident (£50-60,000 per year!) they “earn” around £770/bed per week. No wonder elderly people’s savings dry up in no time, and no wonder they have to sell their own homes to try to fund their “care”.

    And no wonder too, that the over-exploited workers in these homes are among the lowest paid, zero-hours contract workers in the country and there are not nearly enough of them.

   Yet all these profiteering companies claim to be crippled by debt! And most of their predecessors, despite this on-going extortion, actually went bankrupt (“officially”, that is!), and collapsed. So what is really going on?

Hiding the money

The attempt by Panorama to “follow the money”, didn’t really succeed: these companies, mostly financed through private equity, are all deliberately hidden inside a huge spider’s web of linked subsidiaries and shell-companies, so that their accounts are almost totally opaque.

    The money trail ends in the Cayman Islands and Bahamas: tax-free havens where the rules protect them from any kind of scrutiny! And this is fully sanctioned - indeed, has been promoted, by one government after another. Yes, the same governments, Labour or Tory, which were - and are - meant to provide social care!

    Panorama gave the example of HC-One, which under the guise of “FCSkyfall Hold Co3" paid dividends of £4.8m to its shareholders in May 2020 - at the height of the Covid pandemic when 20,000 care home residents had just died. And when these care homes were all pleading poverty and asking local authorities for help. HC-One claims this £4.8m wasn’t really “dividends”, but “£1.7m interest on a 3rd party loan and£3.1m in asset management fees”! As if!

    Today, like all the others, HC-One says it is “shouldering a lot of debt”. But just how it “shoulders its debts” was illustrated by its purchase of 110 care homes in 2017. At the time, it borrowed £80m from its own main owner, the private equity firm Safanad, which, within 3 years made £40m out of this loan, in interest!

    Quite obviously this is false accounting - but we are told it is a “common private equity tactic to move money out of the operating companies and to the ultimate investors in a way that maximises their profit"!!

Private bad, capitalism bad

Yes, the same “private equity” which Johnson said showed what a “good thing” capitalism is, when it financed his “Britain-first” vaccine grab last year - as managed by the government’s favourite venture capitalist, “Dame” Kate Bingham.

    Never mind though. The Tory MP and former Health Secretary, Jeremy Hunt, appeared on the Panorama programme to condemn a private-equity-financed care home system, saying it was the “Wild West out there”and that this was the “unacceptable face of capitalism”. Yes, his party’s system which placed the care of the most vulnerable in society (over whom he sheds crocodile tears) in the money-grubbing, profit-before-public-good hands of privateers. For Jeremy Hunt there is apparently an “acceptable” face of capitalism somewhere..! He adds that "We need make sure that market is operating in the interest of consumers, particularly the very vulnerable people who need that sector."

    Yes, indeed. While the private capitalist “provider” market today crumbles in front of everyone’s eyes, whether it’s the provision of care of the elderly, the provision of care for children, the supply of electricity, or even the railways. Tory hypocrisy and capacity for fantasy knows no bounds. It was this party under Thatcher in the 1980s which declared that public was “bad” and private “good”. Nobody can forget how it handed essential public utilities - gas, telecoms, electricity, water, to the private sector, providing the decrepit capitalist class with new “easy money” which guaranteed it totally risk-free profit, in an attempt to inject new life into its ailing, crisis-ridden system.

    Now, 40 years later, the private bosses’ extortion of the public purse has turned vital public services into degenerate basket cases. Like the electricity supply “market”, as is shown by the latest serial bankruptcies of the supply hustlers. Or the inability of even big suppliers to repair the damage 2 whole weeks after Storm Arwen cut power lines!

    Yes. Today all these chickens are coming home to roost. But to prevent them from laying any more eggs for the capitalist class, the working class will have to take over the hen-house.