Five care chains thought to make £150m a year for low-rated homes in England

Five of the largest private care chains are taking £150m a year in taxpayers’ money for places in English elderly care homes rated inadequate or requiring improvement, including some that are “not safe”, the Guardian has estimated.

The leading earner from public funds is HC-One, a chain of 285 care homes majority-owned by a US private equity company, according to analysis of council spending records.

It was paid an estimated £50m in 2022 by town halls to look after people in homes rated in the Care Quality Commission’s (CQC) worst two categories, according to estimates from public spending records.

In 2022 the London borough of Southwark spent more than £3m on beds at HC-One’s Tower Bridge Care Centre, which was rated “inadequate” after inspections in August.

Inspectors ruled it “not safe” and “not well-led”, with problems including residents’ medicines being missed and out-of-date drugs being used. Inspectors found the home was understaffed and that people were overworked.

The company was formed from the collapsed Southern Cross chain and does 75% of its business with councils that fund care for people without the wealth to pay their own bills.

Four Seasons Health Care, meanwhile, earned an estimated £38m from councils for places in homes judged to be inadequate or requiring improvement. The company is currently operated by administrators after a previous owner, the private equity firm Terra Firma, racked up huge debts. Since 2019, the company’s £625m debt has been controlled by a US hedge fund manager.

Related: English councils spent £480m on ‘inadequate’ care homes in four years

The extent of the major private firms’ earnings from public funds emerged after the Guardian revealed this week how English councils have altogether spent close to half a billion pounds in the past four years on “inadequate” care homes.

Labour denounced the situation as “scandalous”. The government responded that it was the responsibility of councils and the (CQC) to “hold failing providers to account”.

Nadia Whittome, a Labour member on the levelling up, housing and communities committee, said the findings showed “private investors are lining their pockets with public funds”.

She tweeted: “Time for a National Care Service, publicly owned and free at the point of use.”

Leandra Ashton, co-founder of the charity People’s Care Watchdog, said: “In Britain in the 21st century how can we say it is OK for there to be inadequate care homes and for people to make profit from that at the expense of taxpayers?

“The system is never going to work as long as we allow private equity firms to run care homes.”

Runwood Homes, Bupa Care Homes and Barchester Healthcare each received about £20m for places in care homes that were rated as requiring improvement.

Runwood is owned by the property developer Gordon Sanders, who paid himself at least £21m in five years despite inspectors finding multiple breaches of staffing, safety and leadership rules, with residents left in dirty incontinence pads and staff accused of rough handling.

The London borough of Barking and Dagenham also spent £2.9m with HC-One in 2022, including at the “inadequate” Chaseview in Romford, where inspectors concluded “people were not safe”. Both Chaseview and Tower Bridge Care Centre breached Care Act regulations.

Evelyn Akoto, the cabinet member for health and wellbeing at Southwark council, said the borough was seeking to boost wages and training among care workers. Councils are calling for a £13bn-a-year increase in central government funding to help them improve care standards and meet rising demand, caused by an ageing population and a steadily rising number of people with dementia, forecast to hit 1.6 million in the UK by 2040. The government, meanwhile, has pledged a fraction of that – £7.5bn over two years.

Related: Tell us your experiences of care for people residing in care homes

A spokesperson for HC-One said: “Any home that is not rated ‘good’ or above is not in line with our high standards of quality and comfort which our residents expect and deserve. Where a home is temporarily not rated in the two top tier categories by the CQC, it is due to specific local circumstances, which we immediately address through our robust internal processes.”

A spokesperson for Four Seasons Health Care Group said: “The ownership of the group has no impact on the day-to-day care of our residents, which remains our first priority. The Four Seasons Health Care Group works with regulators and local authorities to continuously improve ratings and we are pleased to say we have made progress since 2022.”

A spokesperson for Barchester said: “We don’t have any comment to make on the estimates.” Runwood declined to comment. Bupa did not respond to a request for comment.