An ageing population and spiralling health and social care costs pose a formidable challenge for countries like the UK – which, say campaigners, is being exacerbated by privatised system which leads to capital extraction by outsourced providers.
Voices from the co-op movement have long opposed this capitalised system, advocating a mutually owned model instead – exemplified by the likes of Equal Care Co-op, based in Calderdale, West Yorkshire. At last year’s conference of the Co-operative Councils Innovation Network, Equal Care’s Emma Back urged councils to used their devolved powers to commission from co-ops, and offer co-operative social care instead of letting outsourcers – often owned by foreign equity companies – extract money from communities.
Similar voices have come from within politics. At the 2022 Co-op Congress, Labour/Co-op mayor of Greater Manchester, Andy Burnham, said: “The profit motive does not sit well with care of any kind – that’s the problem. The more complex the needs, the more that profit motivation becomes a problem. This is a broken system.”
Now the Centre for Local Economic Strategies (Cles) – a driving force behind the community wealth building model in the UK – has released a report on social care, Ending extraction in the UK care system, which analyses the extent of capital extraction and offers solutions, including community-led and co-operative models.
“The truth is that money exists in the care system but too much of it is leaking out,” it says.
This extraction, says the report, happens in two ways – based on company structure, “How the company is structured – ”through the way the company is owned, its business functions are structured and its investment and internal payments set up”, and how a business operates –“through the choices made about taking profits, paying dividends and how it cuts costs that affect staff and those relying on services”.
Figures in the report claim that of the 20 largest providers in the children’s homes and fostering sector, 50% have a private equity or sovereign wealth fund owner. Of the five largest providers in adult home care, four were either owned by private equity firms, US hedge funds or by billionaires based abroad. And of the largest care home providers in the UK that are owned or backed by private equity firms, 80% had owners in tax havens.
“Instead of facilitating the care of children, older people, disabled and learning disabled people, our care system facilitates the extraction of value and wealth from places and local public service budgets,” the report argues. “While executive pay booms, frontline workers receive little more than the minimum wage.
“While local government and central government struggle to pay the bills to meet increasing demand, private company profits continue to rise.”
The sums at stake are vast. Cles says nearly £50bn is spent on care services by English councils every year – 70% of all local authority spending, in addition to the costs paid by individuals and their families, estimated to be 50% of social care costs, and the “huge levels of care done unpaid”.
Looking at the North East, South Yorkshire and West Midlands Strategic Authority areas, the report says £3.76bn was spent on care in 2024. While local authority care spending in these regions has risen 31% since 2018, wages have risen by just £1.15 per hour.
The report adds: “Because of austerity and public service provision being opened up to private markets, social care in the UK is increasingly dominated by the kinds of predatory business
models and profiteering that should have no place in the sector. While a handful of
investors make a fortune from care provision each year, they do this by making care
workers struggle in poorly paid, precarious jobs, which means that care provision is
substandard and frequently unsafe by also underinvesting in the necessary facilities and
equipment.”
But there are alternatives, says the report. “Across the UK, examples show that care can be organised in ways that meet people’s needs while creating good jobs and stronger local economies … With imagination, courage and long-term investment, local and regional authorities can build care systems that work in the public interest.”
One way forward, the report says, is the use of social enterprises, co-operatives and community-led models, which show how “care can reinvest in workers, improve services and keep money circulating locally.
“These models don’t just reduce extraction. They create good jobs and build resilience in
places – treating care as a foundation of the economy, not a burden on it.”
Here, Cles turns back community wealth building – which directs procurement by local authorities and other large organisations to benefit local employers and keep money circulating in regional economies.
“With more than £50bn spent by local authorities each year on care services,” says Cles, “there is a massive opportunity to reshape local economies. If this money is spent thoughtfully to maximise local employment, support local businesses, and encourage co-operative or community ownership, it could transform care while strengthening communities.
“Anchor institutions, especially local government and strategic authorities, have a vital role to play. By working together, setting new standards for care, shaping markets, commissioning differently and supporting non-extractive providers, they can help shift the system. They can ensure that public money for care systems works in the public interest, delivering the public value for money and putting care at the heart of a fair economy.”
Some progress is being made, the report notes. In Newham, east London, the council is running a system where providers must meet criteria on “ethical practices, local benefit or social value”.
This approach, says the report, ”has reduced the incentive for larger, more extractive suppliers to enter the market and increased the number of locally based SMEs delivering homecare services”.
A similar ethical procurement framework is in place under Wigan Council – while across the whole of the Greater Manchester Combined Authority, the ten local authorities are collaborating through a regional care co-operative for children’s services.
This shows how the new strategic authorities could use their powers to drive public service reform, the report argues. “Individually, councils can be constrained by rigid institutional structures and overwhelming demands on their resources; together, they can shape regional markets more effectively.”
Public bodies can also form co-ops with “non-extractive providers”, the report adds, “where the relationship is mediated through the rules and governance of the co-operative rather than public contracts. This would create new opportunities for effective market shaping, commissioning and long-term partnership.”
There is also more scope for ethical sourcing through the new Procurement Act and Children’s Wellbeing Bill which, the report says, “includes measures to strengthen co-operation between local authorities and cap profits of providers”.
