Implication for NCS of Balhousie

Nick Kempe – 7th October 2022

Ten days ago, Tony Banks, the owner of the Balhousie Care Group, the largest care home operator based entirely in Scotland, announced he had sold the business to AcalisCare, an “international healthcare firm”.  

From a private investor perspective the sale is a sign of confidence in the Scottish market and that business interest have few concerns that the Scottish Government’s proposals for a National Care Service (NCS) pose any risk to their interests.  Only one private provider appears to have bothered to respond publicly to the consultation on the NCS Bill.  But then they have no need to do so. They have a hotline to companies like KPMG who are at present being employed by the Scottish Government behind the scenes to design the NCS.

Meantime, the Scottish Government is maintaining the charade that the NCS is still to be “co-designed” with people who have “lived experience”.  How people will be able to co-design services, like those  offered by Balhousie, when they are owned from abroad has not been explained.   At the first NCS National Forum meeting on Monday, attended by a those with lived experience, a panel was asked about the recent buy out of Balhousie.  Here is what Humza Yousaf, the Cabinet Secretary responsible for Health and Care, said in response:

“where Mary [Alexander, from Unite and chair of the Fair Work Convention] and I agree is none of us would rather public money goes to a private company that has a bank account in the Cayman islands. I don’t want to see it and it makes me frankly uncomfortable 

Mary and others might well advocate taking profit out of the system entirely, it’s a very laudable one. I’m not convinced it’s at the moment affordable given the financial constraints we are under”.

This is just wrong.  The  truth is that in the financial crisis, Scotland cannot afford to continue to allow profit to be extracted from our care system.  Unfortunately, the provisions in the NCS Bill that appear designed to prevent that happening are unworkable.

The Balhousie Care Group is a very profitable business. Its most recent accounts, for the year to September 2021, show that on turnover of £36,772,000 it made a net profit of £4,317000 (11.4%) and paid off almost £5m in debts. Had that profit been distributed to the 1,233 staff that could have financed a pay increase of around £3,500 a person.  

Instead, Balhousie Care paid a dividend of £750k to its parent company, Balhousie Holdings Ltd (the company that has been sold to AcalisCare).  This in turn reported a dividend of £1,150,000 to shareholders.  Prior to the sale, Companies House shows Mr Banks controlled over 75% of the shares in the company so it appears most of this money went to him.  Companies House gives gives Mr Bank’s country of residence as Jersey, a tax haven.

Ironically, Mr Banks is a former chair of Business for Scotland who in that role 15 years ago criticised the way money was being sucked down to London and argued the need for social investment https://www.businessforscotland.com/only-independence-guarantees-scotland-the-powers-to-reject-austerity/?doing_wp_cron=1665056375.5976369380950927734375

The only provision in the NCS Bill that could conceivably be used to stem this flow of money out of care is Clause 41 “Reserving right to participate in procurement by type of organisation”.  This says that when contracting for services outwith the public sector, the National Care Service can specify that in certain circumstances it will only consider non-for profit providers with a “public service mission”.   The clause has been welcomed by a significant number of voluntary sector providers in their response to the NCS Bill, some of whom have linked this to calls for stronger action to be taken against poor care services.

What the voluntary sector do not appear to have realised is this clause, central to the Scottish Government’s claims to be committed to ethical commissioning, isalmost certainly unworkable.  The reason for this is that the law, as enshrined in the Self Directed Support Act and the Choice of Accommodation Directions (which covers care homes), gives everyone whose care is publicly funded a legal right to choose their own services.  Without any provisions in the NCS Bill to amend those rights, any attempt by the NCS to use contracts to limit what services are operated for profit will fail.

Rather than tinkering with procurement processes, Common Weal believes the Scottish Government should follow the precedent that has been set with foster care and specify that all care services should over a period of time become not for profit.  That would be the most effective way to stop the £millions that are leaking out of the sector.

There are no further provisions in the NCS Bill that might be used to control the market, despite Humza Yousaf’s professed wish that profits should not go to bank accounts in the Cayman Islands.  While the Regulation of Care Act provides some control over services – and the NCS Bill includes some further measures that will make it a little easier for the Care Inspectorate to take action against those that are failing – there are no controls over providers.  People like Tony Banks can therefore sell their businesses to companies like AcalisCare without a question asked.   The contrast with the proposed Land Reform legislation, where the Scottish Government is suggesting that a public interest test before large land holdings can exchange hands is striking.

In the case of AcalisCare, which is currently a minor player in the international market (it appears to have had just 40 care comes prior to the purchase of 28 homes from Balhousie) there are serious questions to be asked about the public interest.  

First, there is the complex company structure that has been created to handle the purchase.  Balhousie Holding Ltd is now owned by Selba Care Ltd which is owned by Selba Ltd which is owned by Selba Ventures Ltd whose three listed shareholders live in Portugal, Monaco and Liechtenstein and whose correspondence address is in Liechtenstein.  It is unclear how this company structure relates to the organisation/s that are marketing themselves as Acalis Care https://acaliscare.com/. To muddy the waters further, the AcalisCare website states a company called AcalisCare Technologies, which is registered in the UK, is a subsidiary.  However, the ultimate shareholders of AcalisCare Technologies appear to be three Belgian brothers and not the same people who control Selba Ventures Ltd!

Second, the sale of Balhousie Holdings Ltd has been accompanied by the redemption of existing charges over the companies assets (security for loans) and the creation of new charges.  That raises significant questions about how this purchase has been financed, the implications of “AcalisCare”’s rapid expansion and its current spending spree. Unlike in England where there is now some oversight over the care market and provider finances, in Scotland there is none and none is proposed in the NCS Bill.

Third, the Acalis website states that AcalisCare technologies “would want to distribute [its products] throughout our own international health and care facilities”, which now presumably include Balhousie Care Homes. “Recent investments and interests include a home-testing kit for Alzheimer’s Disease (Alz1 kit) as well as a mobile aerosol sanitising solution (Felmar®) that rapidly executes preventative disinfection cycles”.  Whether these products require licensing is unclear, but that any healthcare provider should have a captive and vulnerable market on which it could test or use its products seems to me to raise serious matters of public interest.

The Balhousie Care Group sale shows is that there is an urgent need for the Scottish Government to introduce proper regulation of providers for as long as they exist, to ensure they are acting in the public interest, and to stop money leaking out of the sector.  The way to do that, Mr Yousaf, is through the NCS Bill.

1 thought on “Implication for NCS of Balhousie”

  1. I consider myself very lucky in that I am in the process of buying a retirement flat in Oxford, where i have family, which is run by a non-profit making organisation called The Secure Restirement Association, Headington limited and run on co-operative lines, where residents become members and shareholders in the organisation. There is a Board of Management, elected by residents and also a resisidents committee who pass suggestions to the management board or organise votes on matters under discussion, a recent one was to decide the colour of new flooring being fitted.
    i dont know whether there are many organisations like this in the UK, or any specifically in Scotland but it seems to me , as someone having to consider a future where increasing age can bring frailty and other problems, that this is a good model providing accomodation for others like myself, who want an environment where they can have company when wanted and the support of a warden for some of the time and an alarm service out of hours. There is a service charge which covers her salary and that of an Administrator, plus cleaninf staff for the public areas and maintenance of the grounds, Buildings insurance plus heating and hot water in the flats, etc All of which ensures a high degree of peace of mind and the assurance that there would be help available for most problems which might arise.
    My main difficulties with this coming move are deciding which of my many books I will have space for and my regret at leaving Scotland at a critical time and no longer having a voice in what happens.

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