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This month Joe meets …

by Lisa Carr
Joe Meets

Each month I get up close with key stakeholders in social care. This month I met Barrie Davison, National Sector Head Healthcare and Education at NatWest

How did your career lead you to becoming a Head of Healthcare at NatWest? 

At University I studied Psychology and during this time I was lucky enough to work with children and adults suffering from different forms of dementia.  When I’d finished my degree, I really wanted to work in the field of clinical psychology but sadly in the UK jobs were hard to come by and as my Dad was a Bank manager at the time, I ended up joining the NatWest Graduate scheme.

I’ve spent 25years with NatWest and had several different roles with the Group during this time and whilst I’d love to say my current job was part of the grand design the reality is it was an opportunity that arose and I was lucky enough to be selected and now have what  I genuinely believe is one of the best jobs in the Bank leading our Healthcare and Education Sectors in the UK.

Do you enjoy working and specialising in this sector? 

I love it. Being part of a sector which plays a vital role in supporting our country and the lives of everyone living here is a real honour. During the pandemic NatWest stepped in in providing c£10bn of lending support to businesses which was amazing given the speed at which it was deployed and it means a lot to me to part of an organisation whose values of inclusivity, curiosity, robustness, sustainability, and ambition align with my own personal values.

What are your biggest challenges when dealing with care operators? 

Care operators are operationally complex, emotionally intensive, businesses operating in a highly regulated environment that often don’t get the credit they deserve from the outside world. I think perhaps one of the biggest challenges within the sector relates to talent – the attraction and retention of talent. There are some amazing talented workers in the sector and for it to thrive this needs to be expanded and for the sector to be seen as great place to work and develop a career with clear progression routes.

What do you think are the challenges and opportunities for care providers from the White Paper for Social Care?

I think it’s a start, a welcome start. Having a more integrated system can only be a good thing for everyone, however there is a big difference between having a plan and then executing it. Delivery of what is needed to drive integration is vastly complex and whilst I applaud shared outcomes, I think there is a need for greater clarity around roles and responsibilities and to the point above regarding talent I would love to see the issue of remuneration and career pathways in social care addressed more fully. To deliver this I think a longer term strategy with complimentary long term funding solutions way beyond the next 3years it what is needed.

The fallout from the pandemic coupled with the effects from Brexit has had a devastating impact for care operators.  How do you see their recovery?

I think recovery has been slower than anyone would have hoped for.  That said the demographics here in the UK are supportive of the sector in the medium to long term and we see business models evolving with the care village, supported living, integrated approach becoming far more relevant.

NatWest Group Pension Fund recently announced it has entered a 15-year £500m joint venture partnership with Legal & General to scale up delivery of around 5100 later living homes. How important are deals like this to the future of social care infrastructure? 

Models that support the aging population within existing communities as opposed to residential centred care must be a more sustainable model and require patient capital and or capital that understand the sector beyond an EBITDA / Operating cash flow or indeed LTV metric.

Our pension fund investment is one of many that supports the Banks community approach and aligns with our core values.

One major feature of the JV is the ambition to deliver net zero carbon later living communities. Do you think there will be an increased desire for investors to back social care if its goals are more aligned with sustainability and tackling climate change? 

100%. The E(nvironmental) in ESG is of paramount importance to investors and gaining in relevance every day. I see this year as the year sustainable finance really accelerates and indeed NatWest is leading the market in advising on sustainability frameworks, sustainable bond issuance and more recently has launched its own Green Loan (fee free for SMEs) and Green Asset Finance products products

The market is evolving rapidly and we are now starting to see the associated cost of capital reducing and reflecting the desire to positively impact and shape emission and the carbon footprint.

We are already seeing local planning offices, particularly in the Southeast, provide permission subject to more stringent environmental conditions than is required by law.  

Care operators are set to face significant threats due to rising costs.  What implications will this have on the market and how can care providers best address this?

Inflationary pressures across a broad spectrum of input costs are creating material challenges for households and businesses and for businesses unable to pass the increase’s through to the end consumer; for example care operators dependant exclusively upon LA fees where budgets are constrained there is a real challenge in continuing to deliver outstanding care. This will invariably lead to more vulnerable operators, perhaps those lacking scale and income diversification existing the market reducing bed capacity.

We could see some local authorities re-entering the social care market directly albeit retirement living schemes / social communities will feature with the effect that they will reduce the need for residential offerings.

Investment into environmentally sustainable care facilities / different models that are future proof, great places to work, provide superb environment to delivery care and a quality of life. There are models in other countries e.g. the Dutch model which could signal how our system could evolve here.           

What is your vision for the future for social care?

The demographics of the sector are compelling and therefore a diverse / integrated/ community-based care system that respects and provides a quality of life that is outstanding.

Delivery of this requires longer term vision and the evolution of a more integrated culture and funding basis within the health and care systems. Perhaps a starting point would be the rebranding of Health and Social care so they are considered one and the same.

Barrie.Davison@natwest.com

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