Health and Care Bill

Baroness Tyler of Enfield Excerpts

Lords Hansard - Part 2 & Report stage
Monday 7th March 2022 Lords Chamber

[Baroness Brinton (LD) [V]]

I thank the noble Baroness, Lady Bennett, for tabling these amendments, slightly amended from Committee, and in particular for responding to the Minister’s concerns that the first amendment had perhaps been too broad and would catch the day-to-day business of companies. That cannot be said about Amendment 145.

I also want to pick up a point that the noble Earl made in Committee. He said:

“A company’s working capital, by its nature, is money that is used to fund day-to-day operations in general, and one cannot associate a particular pound with a particular business activity.”—[Official Report, 4/2/22; col. 1161.]


Yet the Charity Commission does have the ability to intervene in the event that a charity, or series of charities stretches—shall we say?—those rules. Its Internal Financial Controls for Charities, CC8, provides very specific guidance. Indeed, in recent years, one charity, the Plymouth Brethren Christian Church, was investigated for a circular set of donations. Each donation to each different body was paid tax relief out of the public purse, coming back to serve the schools that the adults at the community church sent their children to. The way that was structured was similar to a financial instrument employed by the few companies that abused the funding they received from the public purse for social care.

The noble Earl also referred to the Treasury guidance Managing Public Money and Accounting Officer Assessments. I have been through that, too. It is very interesting and clear. Under the heading

“expenditure which may rely on a Supply and Appropriation Act”,

Managing Public Money lists

“routine administration costs: employment costs, rent, cleaning etc … lease agreements, eg for photocopiers, lifts”.

It does not say: “Re-charging sister/parent/daughter companies for large amounts of borrowing and the interest thereto”, which is what has been happening.

It is important that we start to debate how public funding is spent by these companies, particularly those overseas, when we cannot see how that money is spent. I also support the other amendments in the group, which ask for a review of financial regulation. It is interesting that the Treasury guidance refers constantly to the Nolan principles, which are absolutely vital in talking about transparency and responsibility when spending public money. These amendments might not be quite right to deliver that, but it would be good if there were a review under way.

The other thing we must have when these companies spend large amounts of public money is publication of their full accounts. They should not be able to hide behind very short, superficial accounts from overseas.

[Baroness Tyler of Enfield (LD)]

My Lords, I support these amendments tabled by the noble Baroness, Lady Bennett, as I did in Committee. In essence, they are about financial practices in the social care sector that I find completely unacceptable.

The social care provider market, as we all know, is complex, fragmented and too often inherently unstable. One of the causes of instability is financially risky behaviour by a small number of large, equity-backed, highly debt-laden companies in the residential care sector. This has resulted in some high-profile sudden exits from the market, such as Southern Cross and Four Seasons. The key point is that, in the event of the closure of a care home, the provider bears no responsibility for continuity of care. That falls on the local authority, with the direct impact felt by care home residents and their families. That just cannot be right.

It is also concerning that, in its 2021 social care market report, the NAO was unable to analyse the accounts of five of the large equity-backed providers because of difficulty in accessing their accounts. Of course, the issue of the lack of transparency over accounts, profits and shareholders is exacerbated when company ownership is offshore.

As the noble Baroness, Lady Bennett, explained, Amendment 147 seeks to require local authorities and other public bodies to commission care from non-UK domiciled companies only if they publish full accounts and offer transparency over their ownership. There is an interesting international precedent for the latter part of this. Indeed, in February 2022, the Biden Administration announced a set of measures around improving quality and transparency by requiring private equity firms to disclose ownership stakes in nursing homes.

I will finish by making a couple of broad points. For a measure like this to be implemented effectively, it will clearly be essential that local authorities are equipped with sufficient complex accounting knowledge to scrutinise the ownership and financial practices of a provider. Although this amendment would help ensure transparency and enable better scrutiny of offshore entities, I am conscious that complex ownership structures are not limited to companies owned abroad. I hope the time will come when this sort of financial transparency is extended across all providers, wherever they are based.