Care for 13,000 Britons at risk as provider seeks rescue plan

The care of more than 13,000 elderly and vulnerable Britons could be thrown into turmoil after one of the biggest providers of home care visits in the UK warned it would go bust unless creditors backed a rescue plan.

Allied Healthcare, which has contracts with 150 local authorities and also provides out-of-hours services for the NHS, is asking for breathing space on its finances after cashflow problems that have been triggered in part by an £11m bill for back pay owed to sleep-in care workers.

The loss-making company has 12,000 employees and cares for 13,500 people in their homes via a network of 83 branches around the country. According to the Allied website it is the country’s largest domiciliary care business, twice the size of its nearest competitor.

Its Primecare division provides primary and urgent healthcare services, including NHS 111 telephony services, GP-led medical centres and end-of-life care. It also provides healthcare services in a number of secure settings including prisons, immigration centres and secure training centres.

Allied was bought by the German private equity firm Aurelius in a £19m deal in December 2015 but it has struggled against a backdrop of local authority funding cuts.

In a letter to creditors seen by the Guardian, its chief executive, Luca Warnke, said it had “significant funding pressures on our customers that have impacted on their ability to deliver financially viable health and social care services”. It added that it had taken the decision to pursue a company voluntary arrangement (CVA), an insolvency procedure that will enable it to agree a payment plan with creditors that include landlords and members of its pension schemes. It expects to file for the procedure on Monday.

Warnke blamed rising agency labour costs for its woes, pointing to the shortage of doctors and nurses since the Brexit vote as well as a potential £11m bill for backdated “sleep in” payments depending on HMRC’s calculation of the pay period.

Last year the government changed its guidance on how sleep-in carers should be paid, advising that they were entitled to earn the national minimum wage for the entirety of the time they were present in a house rather than just a flat rate. At that time some charities warned it could cost the sector £400m and potentially bankrupt many social care charities and providers.

The company said in a statement: “As with many independent providers in the UK health and social care sector, Allied Healthcare has been operating in a highly challenging environment for a sustained period of time, which has placed pressure on the company.

“As a result of these challenges, Allied Healthcare has has taken the decision to pursue a company voluntary arrangement as part of a prospective business plan that will ensure safe continuity of care across our UK-wide operations, place the company on a sustainable long-term footing and maximise repayments to creditors.

“The proposed CVA will not impact on the safe continuity of care that Allied Healthcare provides across the UK,” it said. “Allied Healthcare will continue to trade safely and it remains business as usual for Allied Healthcare employees and customers.”

The company insisted there were currently no plans for redundancies or branch closures.

A spokesman for the Local Government Association (LGA), which represents local authorities, insisted that councils have “robust” contingency plans in place to manage the care of individuals if necessary if the company were to fail.

“The absolute priority for councils affected is to protect the vital care and support that older and disabled people rely on and ensure it is able to continue without interruption,” a spokesman said. “The LGA is working alongside the Care Quality Commission and the government to support Allied, where possible, as it plans to financially restructure the business and continue to provide high-quality home care.”