Why Andy Burnham is right to want for-profit firms out of social care

Prime minister Andy Burnham announced on Wednesday his commitment to improving England’s social care system.

If the new prime minister has his way, England will legislate a new national care service within the next two years. Burnham will also seek to make social care more person-centred, ensure it’s better aligned with the NHS and remove firms who are profiteering on the backs of vulnerable people.

The majority of social care in England is run for-profit. The consequences of this go far beyond unfair profiteering. It actually worsens many of the core problems with England’s social care systems – making it less available, of worse quality and widening inequalities.

Any reforms which aim to make services work for people, not profit, must change who owns social care services.

Should we reform funding or ownership?

One option for improving social care would involve revising how care is funded. This could be done through some form of new taxation or social insurance.

This strategy would not only allow current systems of provision to be maintained, it would ensure more people can have their care paid for by the state, as well. This kind of reform might also help to remove some of the burden of individuals paying for care, and reduce the stark two-tier system that has emerged – where some people are able to pay for high quality care, while others receive free, but often worse quality, care.

But funding reform alone will not create a person-centred care system. It is key that the issues being caused by for-profit care homes are also addressed.

For-profit care homes deliver worse quality care than non-profit and council run care homes, even taking into account their funding sources. Meanwhile, even in systems where most people receive state-funded care like the NHS, for-profit providers tend to select the healthiest patients and operate in the richest areas – worsening inequalities in who is able to access care.

In studies looking at the delivery of high-quality, local care, ownership was a key determinant of care quality – with profit-motivated commercial enterprises being less responsive to a region’s care needs than non-commercial or publicly owned enterprises.

This is why it’s welcome to see both Baroness Louise Casey and the prime minister acknowledge that the way care is provided, and their commercial incentives, are a crucial part of the discussion. Both are opposed to “profiteering out of human misery and human life”. But they must not be confused about why profiteering and care ownership matter.

It is not simply a matter of principle. Profiteering matters because for-profit ownership has worsened care accessibility, quality and equality.

So even if we change how social care is funded, it will only have the greatest impact if there’s a reform to care provision, as well.

How do we change ownership of care services?

There are two options for creating a care service run not-for-profit.

The first is to re-balance the market. This would ensure that the commissioning of services prioritises ethical models of ownership. Ethical models of ownership may include those owned by councils, charities or co-operatives, or those which are run locally in partnership with commissioners and user groups.

This could involve legislating to ensure ethical care providers (those run not-for-profit) are automatically the first selected in procurement and placement decisions. Such a reform was actually once advocated by Burnham as a solution to creeping NHS privatisation, and was also legislated in Wales in 2014 for social care provision.

These preferred provider models don’t always ensure all care is delivered ethically. But in a system where good quality, non-profit care homes are going bust, it could redress a failing market dominated by for-profit providers.

A second option is to enforce the change by asking care companies to convert their company registration type to a form of social enterprise, community interest company or registered society – or be replaced by state-owned provision.

This was something the Welsh government did in relation to children’s social care, who legislated to ban for-profit provision in 2025.

Their approach has been careful and phased. Private providers have been allowed a four-year period to convert to a non-profit model. The government has also banned new for-profit providers from registering, stopped existing for-profit providers from expanding and will by default place children in non-profit care homes – except in exceptional circumstances.

Ultimately, this approach ends up in a similar place as the preferred provider model – enforcing non-profit provision, unless there is none available. But the difference here is the emphasis in the meantime, where support is provided so companies can convert and new private providers are banned from entering the market.

Either option will require a large amount of political capital in the face of lobbying – and already there are growing threats of market exit and disruption.

But the Labour government must focus instead on the dangerous consequences of inaction. For-profit care homes are putting residents’ safety at risk, creating care deserts where services aren’t profitable and evicting patients when they can’t afford fee increases.

Benjamin Goodair receives funding from The British Academy and The Nuffield Foundation.