Only the oldest of social care hands will recall the impact of the Seebohm Report of 1968: a strong unified local authority department; a commitment to professional development and a focus on prevention; partnership and harnessing the strengths of communities. It was all within a publicly funded and provided service – a public sector golden age that lasted little more than a decade.



Since 1979 there has been a remarkable shift in sectoral provision. In 1979, 64% of residential and nursing home beds were provided by local authorities or the NHS; by 2012 it was 6%. In the case of domiciliary care, 95% was directly provided by local authorities as late as 1993; by 2012 it was just 11%. This has been accompanied by a growing role for large companies with 50+ homes at the expense of small, family run businesses – five large chains now account for 20% of provision and this figure is expected to rise.

Does this matter? The obvious negative impact of the move to the private sector is on the workforce. Research has highlighted an array of poor practices: restricted annual leave; a reduction in the numbers of qualified nursing staff; increased resident-staff ratios; sick pay removed; a failure to pay the national minimum wage; and an increase in zero-hour contracts. There is every reason to think that this, in turn, affects the quality of care staff deliver.

The big private operators say they have reached breaking point with the prospect of paying the living wage. Threats to leave the market are becoming routine. New research suggests more than a quarter of all care homes in the UK could go out of business in the next three years as they struggle to cope with rising debt and antiquated infrastructure.

There’s no doubt that social care needs better funding. But we may want to ask why this should be funnelled into residential institutions – especially into business models based on private equity buyouts and offshore ownership. Some of these businesses are based on fragile and high risk investment models designed to maximise short-term financial returns, with perhaps less focus on the longer term or the wellbeing of service users.

An excellent new report from the Centre for Research in Socio-Cultural Change demonstrates that the calls from private companies for a “full cost” fee level are based on a wholly inappropriate return on investment of 12% – the report sensibly proposes a maximum return of 5%.

The privatisation process is so ingrained that a big bang reversal is unrealistic, but here are four tests that could improve the situation:

Transparency test: This could stipulate that where a public body has a legal contract with a private provider, it must ensure full openness and transparency with no “commercial confidentiality”. In addition, non-statutory providers could be made subject to local political scrutiny processes and to the Freedom of Information Act, from which they are currently excluded.

Ownership/taxation test: At a minimum (and in the light of the Panama Papers scandal) the ownership of all companies providing public services under contract to the public sector, including those with offshore or trust ownership, should be available on public record. A taxation test could require private companies in receipt of public services contracts to demonstrate they are domiciled in the UK and subject to UK taxation.

Workforce test: All providers should be expected to comply with minimum standards around workforce terms and conditions, training, development and supervision. This could include outlawing attempts to get round the national minimum wage levels such as not paying travel time between visits or using tracking devices that pay people by the minute. Commissioning bodies could also include procurement requirements designed to oblige all care providers to participate in collective bargaining, and to outlaw such practices as blacklisting workers for taking part in trade union activities.

Accountability test: At worst the big contractors are subject to short term bidding bans in the event of failure. Bringing democratic accountability is problematic. One option would be to explore some form of public “right of recall” where contracted-out services are thought to be of unacceptable quality – say where 3% of the adult electorate has formally petitioned the commissioning authority. More broadly, economist and writer Will Hutton argues for reform of the Companies Act to require businesses to deliver goods and services to meet social obligation, rather than short term enrichment.

Ultimately, however, we need to question large private chains founded on risky financial models having any place in the realm of personal care and support where the free market cannot profitably supply the services. Why aren’t we talking more about this?

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