Council Spending Cuts Spur Saga Health Sale

The prospect of deeper post-Election cuts to local authority healthcare budgets has prompted one of the UK's biggest providers of the services to accelerate its exit from the sector.

Sky News understands that Saga, the FTSE-100 travel and financial services group for the 'grey market', has appointed Greenhill, an investment bank, to sell the public sector operations of Allied ‎Healthcare.

‎Allied has a number of contracts with the NHS and local councils, as well as providing domestic care for elderly clients who pay for services themselves.

In a statement in January, Saga, which has disappointed investors since floating on the stock market last year, said it would focus on privately-funded homecare where the company has a direct relationship with customers.

"As a result, the parts of the Allied Healthcare business focused on local authorities and the NHS do not fit with the Saga business model and the decision has been taken to divest this part of the business," it said.

Greenhill is understood to be preparing to begin a formal auction of the assets in the coming weeks, with the outcome of May's General Election‎ likely to have implications for the scale of some aspects of publicly-funded healthcare services.

George ‎Osborne, the Chancellor, has come under pressure since Wednesday's Budget to spell out further details of where billions of pounds in savings will be found from public sector expenditure.

The main parties have all insisted that their commitment to the NHS is cast-iron, but many local authorities have already‎ been forced to reduce in-home care as a consequence of budget cuts.

Saga only acquired Allied Healthcare in 2011, hoping to expand it alongside its presence in insurance, travel and newly emerging areas such as legal services and wealth management.

The company is also piloting a 'home from hospital' service through a partnership with Spire Healthcare which aims to help patients recover in their own homes.

Shares in Saga closed down more than 1.5% on Thursday at 174p, giving the company a market value of just under £2bn.