Those operating care services in the North East, South Yorkshire and West Midlands have taken more than £250 million in profits over the past three years.
Private companies operating care services in just three regions of England have taken more than £250 million in profits over the past three years.
Reclaiming Our Regional Economies (RORE), a five-year collaboration between not-for-profit organisations New Economics Foundation, Centre for Local Economic Strategies (CLES), Co-operatives UK and Centre for Thriving Places (CTP), has looked at how public money is being siphoned out of the care system rather than reinvested to improve services.
Last year alone, it reports, £3.8 billion was spent by local authorities to fund care services in the North East, South Yorkshire and West Midlands combined authority regions. Yet not all of that investment is reaching those it is designed to support.
“The vast majority of local authority budgets is spent on care services, but far too much of it is leaking out of the system, extracted as profit and investor returns, instead of providing better services and fair pay for workers,” said Leah Millthorne, report co-author and associate director at CLES.
Deeper issues
Between 2021 and 2024, £256 million of profit was made by companies providing care services in these regions. Over a third of those companies are owned by private equity firms or companies based in tax havens (or both), and £45 million was paid out in dividends to shareholders while £33.6 million was paid in interest, up to 60% of which went straight to private equity and tax haven-owned companies.
The report dryly points out that directors of these companies were earning up to 60 times more than the average wage, while frontline care workers were often paid below the living wage.
“Our new figures are just part of the picture we can get from publicly available information,” said Rosie Maguire, report co-author and manager of policy and programmes at CTP.
“We know there’s a deeper issue with big companies taking out even more money in debt payments and rent, but our systems are set up – from national to local level – to be unaccountable about where public money goes,” she added.
