£1.5bn ‘leaks out’ of care sector each year, says CHPI

One-tenth of the UK care home industry’s annual income ‘leaks out’ through rents, fees and profits, a report has claimed.

Out of a total income of £15.2bn, an estimated £1.5bn (10%) is used for rent, dividend payments, net interest payments, directors’ fees, and profits before tax.

The analysis by the Centre of Public Health and Interest (CHPI) is based on a study of the accounts of 830 adult care home companies, including the 26 largest providers. Collectively these companies represent 68% (£10.4bn) of the total estimated annual revenue for independent adult social care home companies.

For the largest 26, £13.35 of every £100 put in goes to profit before tax, rent payments, directors’ remuneration, and net interest paid out. This amounts to £653m a year out of a total income of £4.9bn.

For the 784 small- to medium-sized care home companies, £7.07 of every £100 goes to profit before tax, rent payments, directors’ remuneration, and net interest paid out. This amounts to £390m a year out of a total income of £5.5bn.

The research, which was part-funded by Unison, said £261m of annual income received by the largest care home providers ‘goes towards paying off their debts’, with £117m (45%) going to related, often offshore, companies.

The 56-page report said in an ideal scenario most of the money would go directly to looking after residents, with enough staff with the right training.

It said: ‘Despite the billions which go into the care home sector, care home workers are amongst the lowest paid workers in the country with high turnover rates (39.5%).’

The document, which was authored by research manager at CHPI Vivek Kotecha, called for A Care Transparency Act, which would mandate providers to disclose where their income goes; a form of regulation to prevent operators with ‘unsatisfactory financial models’ from providing care in the UK; and capital made available by government for new care homes.