How Britain underpays, capital moves in — and the vulnerable lose.
There is a word that keeps coming up when politicians and think tanks describe England’s social care system: <strong>lottery</strong>. The King’s Fund, the country’s most respected health think tank, just used it in a headline. So did the newspapers. But a lottery is what you play for fun on a Saturday night. Nobody should have to play one to get washed, dressed, and safe at 85.
The reality is worse than the metaphor. In Thurrock, 7,680 older people per 100,000 receive long-term care. In Medway — a demographically and economically similar council — just 4,810 do. That is a 60 percent gap between two towns that look the same on paper [1]. Among working-age adults, the variation is even more obscene: up to 101 percent between comparable councils [1]. More than half of all English councils show gaps of 20 percent or more.
This is not a story about need. It is a story about money — who pays, who doesn’t, and who quietly disappears from the ledger.
The state underpays. Everyone else pays the difference.
Start with the obvious scandal: the state doesn’t pay enough for care. Councils are effectively the only buyer of care-home beds in their area — a monopsony, in economics-speak — and they set the price. That price routinely sits below the true cost of care. The Homecare Association calls it a “stark reality”: commissioning rates that “do not allow care providers to comply with their legal responsibilities” [2]. The Health and Social Care Committee’s 2025 report is blunter still: the provider market is “in distress, struggling to cover existing costs via fees” [3]. So who covers the gap? You do — if you’re unlucky enough to need care and have assets above £23,250. Self-funders pay 40 to 41 percent more than council-funded residents for the same room and the same care in the same home [4]. The person who saved all her life is quietly cross-subsidising the state’s underpayment. The Competition and Markets Authority documented this a decade ago. It has not gone away. It has become the system. And here’s the cruel arithmetic of “reform”: spending on care rose in real terms every year from 2015/16 to 2021/22 — yet the number of people receiving long-term care fell, from 873,000 to 818,000. The number of older people on state-funded care dropped 10 percent [3]. More money in, fewer people helped. That is not underfunding alone. That is a machine that converts public money into something other than care.
The market doesn’t collapse. It consolidates — and that’s worse.
Here is the part the headlines get wrong. We keep reading that “care homes are closing” as if the sector is shrinking. It isn’t. The sector is being taken over. Between 2015 and 2020, 1,578 care homes closed, displacing 48,600 older people [5]. But for every new home that opens, two close — and the survivors are not the small family-run homes that once dotted every town. They are large corporate chains, many owned by investment firms [5]. The CUSP research team at the University of Surrey found that publicly provided care beds fell by 88 percent between 1980 and 2018; private firms now run roughly 84 percent of the market; and about 12 percent of all beds are in the hands of private equity, hedge funds, or real-estate investment trusts [6]. And this is where it stops being an economics story and becomes a cruelty story. The money leaks out of the homes. CUSP calculated that roughly 10 percent of the entire sector’s revenue flows out every year — in directors’ fees, dividends, interest, and rent payments [6]. Investment firms buy care homes with borrowed money (leveraged buyouts), strip out the property, sell it, and rent it back to the operating company. They offshore profits. Southern Cross collapsed in 2011 under exactly this model. Four Seasons followed in 2019. The care home chains that go bust aren’t failing because the state won’t pay — they’re failing because the people who own them already took the money out [6][7]. The evidence says it’s worse for residents. The largest systematic review ever conducted on private equity in healthcare — 1,778 studies screened, 55 evaluated — found PE ownership was “most consistently associated with increases in costs” and had “mixed to harmful impacts on quality,” with no consistently beneficial impacts anywhere [7]. The one UK study rigorous enough to include concluded that private-equity financing and for-profit ownership are associated with lower quality in English care homes [7]. The most comprehensive US analysis found private-equity ownership was associated with a roughly 10 percent increase in resident mortality in the short term [6]. The workers inside the homes tell the same story. Care staff interviewed after takeovers described being short-staffed, managers under pressure not to hire agency cover, medication mistakes, rationed supplies — “unable to obtain basic equipment such as commodes or sanitary pads” [6]. And when homes fail catastrophically, who owned them? Oxford researchers found that 98 percent of care homes closed by the regulator for endangering residents were run for profit — even though for-profits ran only 82 percent of homes [8]. One company alone, Atlas Project Team, was ordered to close 14 homes after an adult safeguarding review documented 2,600 instances of seclusion [8]. So the synthesis is uncomfortable: the state underpays, capital moves in, the small independent homes die, the financialised chains take over — and every measurable outcome for the people inside gets worse.
The poorest places empty out first.
This is where the “lottery” bites hardest. Care homes don’t locate where need is greatest. They locate where profit is possible. Oxford’s research found homes concentrating in affluent areas, where firms can attract self-paying residents, while deprived localities are left without enough provision [8]. The numbers confirm it: London School of Economics research found 41 percent of older people in the most deprived fifth of areas had unmet care need — versus 19 percent in the least deprived [3]. Two million over-65s and 1.5 million working-age adults aren’t getting the care they’re entitled to [3]. The postcode lottery isn’t a funding-formula quirk. It’s the predictable end-state of a market that follows money, not need.
Every “fix” argues about who pays — never who delivers.
So what does Westminster propose? The latest idea, co-authored by former pensions minister Steve Webb, is auto-enrolment social insurance — a “social care premium” for over-40s, modelled on workplace pensions, with an opt-out, that builds you a discount on future care costs [9]. It’s genuinely clever politics: call it insurance, not tax. It pools catastrophic risk. But read it closely. It fixes the payer side of the broken contract. It says nothing about the broken market that receives the money. If you shovel more pounds through the same purchasing chain — councils underpaying, private equity extracting, self-funders cross-subsidising — the money evaporates the same way it always has. The King’s Fund’s alternative — universal access, a cap on costs, national funding — is more honest about the delivery problem, but it’s the same decade-old menu [1]. And the cost cap that was supposed to protect people? Rachel Reeves cancelled it in July 2024 [3]. Meanwhile, the workforce that held this thing together is being pushed out the door. After Brexit cut off EU care workers, the Johnson government opened a care-worker visa route in February 2022; more than 111,000 care workers arrived on it [10]. Then the Home Office slammed the door shut in July 2025 — ending overseas recruitment for social care entirely [10]. The sector now has 131,000 vacancies in England alone — an 8.3 percent vacancy rate, nearly three times the economy-wide rate — and needs 540,000 more posts by 2040 [10]. The government’s white paper insists “British workers” will replace migrants. It offers no evidence that migrants ever displaced British workers; it concedes, in its own words, that low domestic recruitment is driven by poor pay and conditions [10]. The hammer of the immigration debate landed on the heads of the elderly it claimed to protect.
And the generation the state already let down?
This is where WASPI lands, and it’s not a sidebar — it’s the moral centre. The 1950s-born women who fought the state-pension-age change were told, after a six-year Ombudsman investigation, that they’d suffered injustice and should be compensated — recommended at £1,000 to £2,950 each [11]. The government rejected it. Twice. Now MPs from ten parties — Labour, Tory, Lib Dem, Green, SNP, DUP and more, an almost unheard-of coalition — have written to the Prime Minister demanding payouts [11]. Those women are the same generation now entering the care-need years of this broken system. Think about the double message. First: the state broke its promise to you. Then: and by the way, we can’t afford your care either — please pay into a social insurance scheme, or fund yourself until the money runs out. The state asks the young to insure the old, breaks its word to the old, and distributes what it does spend unevenly across postcodes, through a market that leaks a tenth of its revenue to investors.
The takeaway
England’s care system isn’t failing for lack of clever proposals. It’s failing because every proposal for thirty years has asked the same question — who should pay? — when the real question is why does the money not become care? The answer is structural: a state that underpays, a market that rewards extraction over care, a workforce treated as disposable, and a political class that treats dignity as a budgeting problem. Until we fix the delivery side — who owns the homes, who staffs them, and whether profit may be extracted from the vulnerable at all — the lottery will keep being rigged. And the people who lose it will keep being the ones who can’t afford to play.
References
[1] Thomas, R. (2026). Social care postcode lottery revealed: Study lays bare huge disparity in access in different areas. The Independent. https://www.independent.co.uk/news/health/social-care-postcode-lottery-study-uk-b3064828.html
[2] Care England / Homecare Association. (2025). Homecare Association Report Outlines the Stark Reality of Commissioning Care. https://www.careengland.org.uk/homecare-association-report-outlines-the-stark-reality-of-commissioning-care/
[3] House of Commons Health and Social Care Committee. (2025). Adult social care reform: The cost of inaction (Second Report of Session 2024–25). UK Parliament. https://publications.parliament.uk/pa/cm5901/cmselect/cmhealth/368/report.html
[4] Bach-Mortensen, A., Goodair, B., et al. (2025). England’s two-tier care system deepens social care inequalities. University of Birmingham / LSE. https://research.birmingham.ac.uk/files/272596813/Bach-MortensenA2025Englands_AAM.pdf
[5] Iqbal, A., Kinghorn, P., Glasby, J., Tanner, D., Allen, K., Zafar, S., & Roberts, T. (2026). An exploration of the costs of residential care home closures: A mixed method approach. Journal of Long-Term Care. https://journal.ilpnetwork.org/en/articles/10.31389/jltc.386
[6] Corlet Walker, C., Kotecha, V., Druckman, A., & Jackson, T. (2022). Held to ransom: What happens when investment firms take over UK care homes (CUSP Working Paper No. 35). Centre for the Understanding of Sustainable Prosperity, University of Surrey. https://cusp.ac.uk/themes/aetw/wp35/
[7] NHS Support Federation. (2023). Study links private equity to poorer care. The Lowdown. https://lowdownnhs.info/news/study-links-private-equity-to-poorer-care/
[8] Wall, T. (2024). Private firms ran almost all care homes forced to shut for breaches in England. The Guardian. https://www.theguardian.com/society/2024/oct/06/private-firms-ran-almost-all-care-homes-forced-to-shut-for-breaches-in-england
[9] Shaw, V. (2026). Auto-enrolment scheme could help fund social care, says former pensions minister. Yahoo News UK / Press Association. https://uk.news.yahoo.com/auto-enrolment-scheme-could-help-230100272.html
[10] Kilkey, M., & Lingham, J. T. (2025). Closing off social care jobs to migrant workers will only harm a sector that’s already in crisis. The Conversation / Centre for Care. https://centreforcare.ac.uk/care-workforce-change/2025/08/closing-off-social-care-jobs-to-migrant-workers-will-only-harm-a-sector-thats-already-in-crisis/
[11] Harris, K. (2026). Andy Burnham faces new demand over compensation for WASPI women. Daily Express. https://www.express.co.uk/news/politics/2256280/andy-burnham-waspi-women
AI Disclosure: This post was created with the assistance of artificial intelligence. The ideas, analysis, and opinions expressed are my own — AI was used to help compose, structure, and refine my personal notes and thoughts into the final written content. Images and video featured in this post were also generated using AI tools, based on my own creative prompts and direction.
