AM Mark Drakeford questions 'care as commodity'

A private equity firm is in the process of taking over seven care homes in Wales

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The question on whether caring for the elderly should be treated as a commodity to be traded has been raised.

Labour AM Mark Drakeford is leading an assembly inquiry into residential care for older people.

He spoke out as a private equity firm nears completion of a multi-million pound takeover of Britain's biggest chain of private care homes.

Seven are in Wales and they were previously run by Southern Cross, which collapsed last year.

In Wales, care homes are provided by not-for-profit organisations such as housing associations or directly by local authorities and by private firms.

Private provision has been making headlines since last year's collapse of Southern Cross, which operated 33 homes in Wales.

Southern Cross bought care homes, sold the properties on to private landlords and leased them back, relying on residents fees to cover the rents.

It got into trouble when its fee income fell whilst the rents and other operating costs increased.

Seven of its homes in Wales were transferred to Four Seasons Health Care, Britain's biggest private care home chain, but a company struggling with debts.

Now a private equity group called Terra Firma is in the process of taking over Four Seasons - the deal is worth £825m.

'No definitive answer'

Politicians have concerns.

Last month, in the Welsh assembly chamber, Mr Drakeford read a newspaper report on the takeover to First Minister Carwyn Jones: "Guy Hands, the tax exile and private-equity baron best known for his disastrous debt-fuelled takeover of EMI, is poised to snap up Britain's largest care home chain."

Mr Jones replied that the wording from the article "will not fill members with the greatest of confidence in the future of Four Seasons".

Start Quote

The issue around care homes is that the people in those homes aren't empowered consumers, they're actually very vulnerable people”

End Quote Sarah Stone Deputy Older People's Commissioner for Wales

Terra Firma's chair, Guy Hands has admitted it overpaid for EMI music in 2007.

The firm struggled to meet payments on the £2.6bn it had borrowed for the takeover.

Earlier this month, in Wrexham, an assembly inquiry into residential care for older people questioned Terra Firma on its current acquisition of Four Seasons Health Care.

The Labour AM Vaughan Gething asked Terra Firma's Eithne Wallis if the company structure would change.

"Four Seasons previously had holding companies in Guernsey and the Cayman Islands and the inspectors themselves said that they couldn't follow the trail of the debt," he said.

Ms Wallis said she "did not have a definitive answer yet, because these structures are currently being created".

"The investment is being put together and agreed and these structures are being put in place," she said.

"Obviously, when those are determined and fixed then more discussion could be had about that... we absolutely are committed to those principles of transparency."

Garden centres

Mr Drakeford, who is chairing the inquiry, told the BBC's Sunday Politics there was no suggestion that private provision of residential care services was a bad thing.

"But we do ask, I think, a fairly fundamental question, as to whether or not care of older people is simply a commodity to be traded like anything else," he said.

"When we saw Terra Firma they said to us they were involved in essential businesses.

"Their idea of essential includes garden centres, German motorway service stations, Odeon cinemas and, on the other hand, residential care services for older people.

"Certainly there are members of our committee who don't think that simply what you can buy at a garden centre and what you need to look after frail, vulnerable, older people is the same sort of purchase."

'Stable financial structure'

The Deputy Older People's Commissioner for Wales, Sarah Stone, said a "much more clean line of accountability" was needed and "a much more obvious way in which money is being used and value for money is being delivered".

"After all we all consume things, don't we?" she said.

"What we want is a good deal between the person who is providing what they're providing and what we're getting.

"The issue around care homes is that the people in those homes aren't empowered consumers, they're actually very vulnerable people, very often, who need support.

"So we need a really important role for the Welsh government, for local authorities, for health boards in protecting those interests."

Terra Firma says it is providing a stable financial structure at Four Seasons with sustainable debt levels.

It maintains it is committed to transparency and working in partnership with public authorities to deliver the highest quality of care for residents.

After the Southern Cross debacle, the onus is on both politicians and businesses seeking profit from caring for vulnerable people, to demonstrate that lessons really have been learned.

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