DARKNESS AT SUNRISE: UK CARE HOMES SHIFTING PROFITS OFFSHORE?

Following on from this report on the high risk to investors (and their staff and residents) of exposure to care homes, we get this daming exposure of UK companies offshoring their profits owned by a Canadian public sector pension fund. 

See UNISON response

Well done to CICTAR for exposing this. 

"COVID-19 deaths in UK care homes, estimated at over 30,000, have exposed underlying and systemic problems in the care sector. Placing the profit motive at the heart of the social care system in the UK has undoubtedly contributed to increased infection rates and raised the death toll. 

Under-staffing and low pay are one side of profit maximisation. 

The other side, largely unseen, is aggressive tax avoidance in a sector heavily reliant on a public funding. 

This report outlines how three UK care home operators, with more than 60 homes, collect hundreds of millions of pounds in resident fees, while shifting profits offshore through complex corporate structures and tax haven subsidiaries. 

These three operators reflect a broader pattern across the UK care sector now dominated by private equity investors seeking to extract and offshore profits. The three UK care home companies – Sunrise, Gracewell and Signature Senior Living – are owned by Revera, the second largest care home operator in Canada. Revera, facing scrutiny for COVID-19 deaths, is 100% owned by the pension fund for Canadian federal government workers, a Canadian Crown corporation. 

Aggressive tax avoidance on UK care homes appears to violate the pension fund’s own responsible investment principles. In the UK, and globally, there is an urgent need to end the use of tax havens and contrived corporate structures specifically designed to reduce or eliminate tax liabilities where profits are generated. Aggressive tax avoidance schemes should not be tolerated anywhere, but are particularly egregious in the UK’s publicly supported but deeply troubled care sector. 

KEY POINTS: 

• The three UK care home operating companies, despite charging residents more than £225 million in fees in 2019, report little or no profit in the UK and even claimed multiple tax credits. 

• Tax haven subsidiaries – in Jersey, Guernsey and Luxembourg – own UK care homes as part of complex corporate structures apparently designed to extract and offshore profits. 

• Reports to the shareholders of the joint venture partner in the three UK care home companies, a large US listed real estate company, indicate US$84.8 million in net operating income from these care homes in 2019. In stark contrast, the three private UK care home companies reported combined losses of US$12.6 million in the most recent year. 

• The use of tax havens, complex related party transactions and other artificial arrangements, including Scottish Limited Partnerships, allow foreign investors to avoid UK income tax on profits extracted from UK care homes, which have been hard hit by COVID-19 and are heavily reliant on tax-payer funding. 

Residents and family members, as well as predominately female care workers, suffer the direct consequences of profit extraction from the UK care sector. However, when global investors avoid tax by shifting profits offshore everyone in the UK suffers. 

While private payments by residents drive profits, they are underwritten by government spending on public health. Aggressive tax avoidance is unacceptable by any corporation, but particularly egregious in the care sector. This case study of tax avoidance by care homes – controlled by a public sector pension fund – is a clear demonstration that the UK care sector needs urgent reform to ensure high quality care and greater transparency and accountability on public spending"

The "Spanish" flu epidemic & a Canadian Bolshevik Revolt in Wales

For the reasons given in my post from 2008 (see below) I have been conscious of the impact of viral pandemics from an early age.

There are some 80 graves of Canadian soldiers at the Marble Church in Bodelwyddan, North Wales.

Up to 76 of them may have died from the 1918/19 flu epidemic and at least 4 were killed after a violent confrontation between military authorities and those wanting to go home to Canada asap after the end of the first world war (including some who wanted to set up a Bolshevik revolutionary Soviet in the nearby military camp).

Check out Spanish flu - Wikipedia and I think that most people will recognise some striking similarities (as well as differences) with our present crisis.

https://www.johnslabourblog.org/2008/05/come-on-bolsheviks-first-british-soviet.html

“Come on the Bolsheviks” - The First British Soviet?

If you have ever been on the A55 while on holiday in North Wales or driving to catch the ferry to Dublin you would have passed the famous “Marble Church” (St. Margaret's), in Bodelwyddan. The A55 is now a fast dual carriageway for much of the way, but when I was a lad, the road used to pass much closer to the church and you could clearly see lines of White British Military crosses in the graveyard.

On route to visit relatives in Conwy, my father would occasionally mention these graves and would tell me the local rumour that these graves were of Canadian Servicemen who mutinied shortly after the First World War and tried to form the first ever communist Soviet (workers Council) in the UK.

This “Soviet” was crushed by the British Army high command that feared that a “Revolution” was taking place and many of the mutineers were “shot”. There was supposed to be a cover up and it was pretended that the mutineers actually died from the flu epidemic instead of the firing squad.

I only found out a few years ago that the truth is actually less romantic and perhaps even more brutal. There was a military camp at Bodelwyddan (Kinmel Camp), across the road from the Marble Church. Even today it is still I think a military training ground. In 1919 it was a “holding camp” for 20,000 troops, including many Canadians waiting to be sent home after the end of the war. There was a riot on the 4&5th March 1919 by many of these soldiers because ships that were supposed to have carried them home to Canada had been diverted or cancelled. Conditions at the camp were thought to be “rough” with shortages of food and overcrowding.

The report by the London Times does mention that the ring leaders were “not true Canadians, but men with Russian blood” and that the Standard bearer (who waved a “red flag”) was “of Russian extraction”.

A local historian records that a William Tarasevitch was vilified as a 'leader of the mutineers'. On 4th March, a meeting was called by the soldiers of Camp Montreal (part of the camp). A strike committee was formed with Tarasevitch who was a member.

Tarasevitch was one of the mutineers who was later killed, bayoneted in the stomach.

Check out this “bolshie” account of the Kimnal Park “Soviet” (in the true sense of the word). This report claims that the cry “Come on the Bolsheviks” was heard.

5 soldiers died during the “disturbances”. One was probably shot by mistake by the mutineers, while 4 mutineers were bayoneted to death in desperate hand to hand combat with “loyal” units.

Please stop off at the Marble Church (look out for the sign for the nearby Bodelwyddan hospital). The site is incredibly peaceful despite the noise of the nearby duel carriageway. It is difficult to imagine the violence and horror that took place nearby 90 odd years ago. In the grave yard there is also the final resting place of a Welsh guardsman, L/Cpl Burke, who died in Buff Cove during the Falkland War in 1982.

I think that there was actually no “revolution” in Kemnal Park in 1919. It was no doubt horrible, but the dispute was mainly over camp living conditions and the timetable over the return home to Canada. The soldiers were obviously aware of what had happen in Russia (so was the authorities!).

This incident never seemed to affect the attitude of Canada to the “home country”. In the Second World War arguable we would never have defeated Hitler and fascism without the sacrifice of the Canadians Navy, Air Force and Army. The Navy in particular saved us from starvation due to Nazi U-Boat’s while the Army proved themselves in the invasion of France.

Something which I do not think we properly recognise in this country at all. We are not very good at saying "thank you".