Why complain about capitalists subsidising care homes?

It is entirely true that there are problems in Britain's care homes industry. Government has been eager enough to push up the costs of providing them - those rising minimum and national wages - and somewhat less eager to raise the price paid to cover those wage rises.

Yet it's simply bizarre for people to be complaining about capitalists subsidising the sector.

You would be forgiven for thinking that any connection between wealthy financiers and Four Seasons would involve luxury hotel chains. But last week the relationship of rich investors with a very different type of property has been making headlines. The private equity-owned care home business Four Seasons, which cares for 17,000 older and vulnerable residents, has been teetering on the brink of collapse.

It has been a long time coming: loaded with more than £500m of debt by its owners, its £50m-a-year interest payments have become unsustainable. An 11th-hour intervention from the regulator, the Care Quality Commission (CQC), resulted in an agreement with the hedge fund that owns much of its debt. But how long will it be before we are here again?

In the last 20 years the influence of private equity in the UK’s care home chains has grown. Southern Cross, once the UK’s largest provider, collapsed in 2011 when it could no longer service its debt. The demise came after its owners sold and leased back the care homes they ran and used the cash to finance overly aggressive expansion.

Think it though. Care homes are running. The last time a chain went bust not one single one closed. No one lost their care nor home - investors lost a packet. So, what are the investors actually doing as they lose money? Subsidising the care homes with their losses.

More money has been spent upon those care homes than the taxpayer has had to stump up for.

In what manner is this a bad deal for the taxpayer? 

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