National Health Service Commissioning Board and Clinical Commissioning Groups (Responsibilities and Standing Rules) (Amendment) Regulations 2020

Motion to Regret

Moved by

That this House regrets the National Health Service Commissioning Board and Clinical Commissioning Groups (Responsibilities and Standing Rules) (Amendment) Regulations 2020 (SI 2020/469) and the lack of a long-term plan to ensure the financial sustainability of care homes.

My Lords, the care sector has never been more in the eye of the storm than during the Covid-19 pandemic. I pay tribute to all in the sector for the care they have given to so many people, under huge pressure and at no little risk to the workforce. As my mother is in a care home, my tribute is personal and based on first-hand experience.

There is no denying that care homes have been dealt a poor hand during the crisis, which unfortunately is consistent with the long-standing neglect of the sector. We must do better and ensure that as we come out of the crisis, we bring long-term sustainability to care homes and peace of mind to those who live in them. This SI does not aim to do that. None the less, I welcome the proposed increase in the rate that the NHS pays to care homes to cover the cost of services carried out by a registered nurse.

The new rate follows a Supreme Court judgment in Wales, with implications for England. It has also been influenced by a challenge to the 2019-20 rate and the 3.1% efficiency gain assumed within that rate. The 2019-20 rate was subsequently revised and the rate for 2020-21 is built on that revision. Can the Minister explain what efficiency rate had been built into the new rate and whether it is realistic to expect care homes to meet those efficiency savings at this time, when their costs are going well above the inflation rate?

This is borne out by many in the sector. As Richard Adams, the chief executive officer of Sears Healthcare, a small group of care homes, reported to me:

“We are seeing people coming into our nursing homes much later in their life course. Their health care needs are multiple and complex and require very specialised nursing care in order for them to be able to continue to live and to die well.”

Unfortunately, there is very little recognition of this in the contract arrangements in place with clinical commissioning groups. Will the Minister review these contracts and ensure that care homes are adequately recompensed to provide this type of care?

My Lords, I welcome the opportunity to debate the social care sector, and I welcome the increase in rates that the NHS and CCG commissioning authorities will pay for nursing care. I congratulate the noble Lord, Lord Hunt, and echo some of his comments about the sector. What assessment have the Government made of the financial stability of firms promising to house the most vulnerable elderly citizens of our country for the rest of their lives? Is the department looking into the financial strength of care providers, with a view perhaps to reforming how they are funded?

The Centre for Health and the Public Interest’s 2019 study of 830 adult care homes found that 18 of the 26 biggest providers had corporate structures that separate the firm running the home from the ownership of the buildings, representing an estimated £1.5 billion of leakage in fees to pay interest, profit or rent. For the biggest five private equity-owned providers, the cost of debt per bed represented 16% of the weekly fee.

These operators are highly geared with expensive debt, following a number of corporate transactions that would not be permitted in many other areas. If you promise to pay somebody an annuity for the rest of their life, there are strict financial reserving requirements to back that, but it seems that when operating a care home, there are no such financial requirements. Indeed, there is a precarious position, particularly after the recent crisis, because care home operators were not paid enough to cover the costs of keeping people in their care home by local authorities, and therefore private payers—self-funders—had to cover the underpayments.

Is my noble friend aware of the recent study which showed that councils were paying private providers less than £500 per week, but that in the same local authority commissioning groups were paying £720 per week for a home run by councils? Therefore, there are significant differences in the amount that councils will pay for the same type of care. The regulator is supposed to ensure that council commissioning offers fair rates to care providers, but they are now struggling to make ends meet, particularly with the extra costs of PPE and so on forced on them by this crisis. Could my noble friend comment on this situation?

My Lords, these fees are a perfect encapsulation of the disparity between health and social care. Prior to the emergence of Covid, the social care sector was in crisis. Since 2010, local government finance has reduced by 50%, but statutory responsibilities have not. Local authorities have had staff reductions, to the point where there are senior directors, front-line staff and very few people in between.

On 25 February, the Department of Health and Social Care guidance told local authorities:

“It remains very unlikely that people receiving care in a care home or the community will become infected … There is no need to do anything differently in any care setting at present.”

On 14 May, the Health Secretary, Matt Hancock, stated that

“right from the start we have tried to throw a protective ring around our care homes.”

The public response was incredulity, because by that time there had been 10,000 deaths in care homes in England and Wales, according to the ONS—a quarter of all deaths. I repeat the statement from Martin Green, chief executive of Care England, who asked to

“see the evidence of what exactly the protective ring consists… and when exactly they instituted this protective ring”,

asked why

“we had our PPE distribution networks disrupted to send things to the NHS”

and

“why we had our primary care support withdrawn from many care homes?”

Why are they still waiting for it?

On 18 May, in their Covid recovery strategy, Our Plan to Rebuild, the Government pulled another fast trick. On clinical support, the strategy states that

My Lords, it is a pleasure to contribute to this debate in the name of the noble Lord, Lord Hunt of Kings Heath, on amendments to the NHS commissioning rates for the provision of NHS-funded nursing care to eligible residents in nursing homes. I declare my interests as outlined in the register, in particular as a registered nurse myself.

Prior to October 2007, there were three rates for NHS-funded nursing care, which were replaced with a single band for all newly eligible residents. The small number of residents who had been in receipt of the former higher band, prior to September 2007, have been protected and will continue to receive the higher band, unless their needs reduce. Therefore, the statutory nursing care funding for the majority of those entitled has increased to £183.92. This came into force on 20 May and will be backdated to 1 April. This is welcome.

The increase reflects the recommendations of an independent study produced by LaingBuisson into the 2019-20 rate. However, the research was conducted between November 2018 and February 2019, before Covid. Therefore, the report does not appear to take into account the increased cost of PPE equipment and the nursing time associated with its use in nursing homes. However, PPE is essential to prevent the transfer of Covid-19 in nursing homes; as we know, their residents are particularly vulnerable to severe problems when infected with the virus, including in many cases, sadly, loss of life.

I understand that the proposed uplift will be dealt with by NHS England and NHS Improvement. Will the Minister clarify whether additional funds will be made available to CCGs to fund the increase in nursing care payments, or will it have to be funded from this year’s allocations to CCGs? Will the Minister also explain whether there are any plans to fund CCGs to make additional payments to nursing and care homes for the additional costs of PPE equipment and staff time associated with both the changing and using of PPE for nursing and personal care work undertaken by staff for residents—for example, to include the changing of urinary catheters and stoma bags?

I thank my noble friend Lord Hunt for securing this timely debate. I absolutely agree that the long-term sustainability of care homes must be a priority for the Government both now and in the future. When will the long-promised Green Paper be published?

The pandemic has shone a fierce light on the lives of those dependent on social care. The public now understand the heroic work done by care staff, who must be rewarded with decent pay, security of employment and proper protection, with adequate PPE and access to regular testing. Can the Minister confirm that every care home has now received adequate testing kits, as promised by the Government, and can he assure me that these will be provided on a regular basis for all, with a guaranteed 24-hour turnaround time for results? Martin Green, chief executive of Care England, is clear:

“As the lockdown starts to ease … You’re going to have to have testing on a very regular basis. You might be having to test once a week in care homes.”

The Economic Affairs Committee’s radical report, Social Care Funding: Time to End a National Scandal, is still awaiting a government response. It calls for an additional £8 billion for adult social care immediately just to return it to the 2009-10 standards. Published before the pandemic, the report proved prescient by calling for proper investment in the care workforce, with a career structure which better reflects the skills required to be a good care worker and the social importance of the sector. Investment is essential now before a second surge. The Government must learn lessons from earlier mistakes and ensure that the social care sector can better protect its residents. Age UK says that residents are being charged to pay for PPE, as other noble Lords mentioned. Can the Minister confirm this?

The Health Secretary’s claim that he threw a “protective ring” around care homes already lacks credibility when research by LSE estimates that 22,000 “extra” deaths have occurred in care homes during this pandemic period. Many senior care industry figures have pointed to the decision to move some hospital patients back into care homes in mid-March, when testing was not available to them. Figures released by NHS England show that 25,000 patients were moved from hospitals to care homes between 17 March and mid-April, when the guidance formally changed to ensure that testing took place. Can the Minister confirm that, in future, no patient will be returned from hospital to a care home without being tested first?

My Lords, I too support the long-overdue pay increase for nurses working in the social care sector. I also strongly support the regret Motion tabled by the noble Lord, Lord Hunt, who is right to draw attention to the financial instability of this deeply fragmented sector.

There are approximately 15,000 care homes in the UK, with more than 400,000 beds, run by approximately 8,000 providers. Some are very small; others provide a large network of homes. It is a mixed economy: 84% of homes are owned by the private sector, including some that are owned by private equity firms, both British and offshore; 13% are owned by not-for-profit organisations; and 3% are owned by local authorities. Funding comes from a mix of private funders, local authorities and the NHS. Despite this funding mix, care homes have been hit by a decade of cuts in social care funding. An FT investigation last summer revealed:

“Britain’s four largest privately owned care home operators have racked up debts of £40,000 a bed, meaning their annual interest charges alone absorb eight weeks of average fees paid by local authorities on behalf of residents.”

Many have argued that this debt-laden model is completely inappropriate for social care, as is one that involves paying large dividends to investors.

Many homes are already running close to bankruptcy and have expressed grave concerns about the spiralling costs of PPE and extra agency staff, as well as lost income from empty beds. It has been estimated that when bed occupancy rates slip below 87%—as many have now—operating surpluses are such that many smaller care homes quickly become unviable, particularly those with greater reliance on state-funded residents.

This virus has brutally exposed systemic weaknesses in our social care sector. The latest official figures show more than 12,000 Covid-related deaths of care home residents in England and Wales, but it has been estimated that the true figure, calculated by looking at excess deaths of care home residents in the period, could be double that. According to a recent poll, one-third of people say that they are less likely to seek residential social care for their relatives or as a future option for themselves. This brings into very sharp relief the respective responsibilities of central and local government if care home owners go under financially or simply decide to shut up shop and hand back the keys. Simply put, who is the provider of last resort?

My Lords, I will talk about the financial aspects of the care home industry, and what needs to be done after the pandemic to ensure its sustainability.

There are more than 420,000 people in care homes; there are more than 22,000 care homes; and the industry generates an annual income of about £15 billion. I pay tribute to the industry, as it has performed well under the circumstances during the pandemic. We need the sector to be stable, as we have an ageing population and some people have health issues. Care homes are of varied sizes. The smaller companies are normally well managed, particularly if there is involvement by the owners. My suggestion to them would be to curtail their borrowings, be cost effective and, importantly, have adequate reserves. In my business, I have always had adequate reserves. My concern is with the larger companies, which are making over £1.5 billion in profits, with considerable amounts going to hedge funds. There may be complex intercompany structures. It is estimated that a high percentage of the care home industry’s £15 billion income is leaked and goes towards the payment of rent, dividends, loans and directors’ fees, not towards front-line care. The situation is opaque and there is reluctance to inject money into the sector, as there may be structural complexities.

Despite the high income generated by the industry, the staff are among the lowest-paid workers, with a high turnover. It is hoped that the more money that goes to front-line care the better paid the staff will be. In the last 10 years, Southern Cross and Four Seasons have failed. I worry that there may be other problems post pandemic. The care home sector’s revenue comes from local authorities, the residents and the Government. The weekly amount payable per resident is normally between £600 and £800, and the NHS will pay £183.92 or £253.02 per week for nursing care in eligible cases. As there is a contribution from the state, there needs to be transparency and accountability and we must ensure financial stability. We should, therefore, perhaps consider some form of legislation to achieve this.

Finally, my own business—insurance—is properly controlled and regulated. Would my noble friend the Minister like to comment on the issues I have raised?

I too support this Motion and thank the noble Lord, Lord Hunt, for tabling it. Will the Minister explain how the 11% increase to nursing rates was determined? What consultation was held with the care sector and the NHS to determine the increase?

This SI is very straightforward and limited but, pandemic aside, it is tabled at a time of huge turmoil and instability in the sector. We all know about the issue in some care homes of private patients subsidising those supported by their local authority, either in total or in part. We know this is not fair. As my noble friend Lady Barker said, local authority funding should be adequate.

The real scandal laid bare by the Covid-19 epidemic is the delay of the care Green Paper and the lack of certainty for the sector, which was struggling financially before the pandemic. The financial model is broken. Can the Minister tell the House when this paper will be published? Its working group members are England’s experts on the subject, there have been cross-party talks about it and Prime Ministers Theresa May and Boris Johnson promised it, so when will it be published? The delay is a scandal. I feel sure the Minister will tell the House that the answer is “later”. That is always the answer.

For weeks we applauded NHS and care workers every Thursday evening to say thank you, and no one can be in any doubt about their commitment and the lengths to which many go to ensure care for those in their charge. Not many workers paid only the basic minimum wage would move into their workplace for weeks to guarantee the safety of those in their care. The professionalism shown by care workers from the UK, the EU, the Commonwealth and elsewhere is exemplary.

How would the Minister fill the places left by departing EU staff if the door to their entry were closed by the Home Office setting a salary requirement of over £30,000? The Home Secretary has suggested that we could recruit by appointing British workers, yet for the last year or so unemployment has been hovering down around the 4% mark and supermarkets pay the same sort of rate for less worry and 5% off grocery bills.