James Tugendhat, chief executive of HC-One, explores how the social care sector can attract capital investment to address the shortage in care home beds

With demand for care rising, and the need for new care infrastructure growing clearer by the day, we are at a pivotal moment.

By demonstrating our value, and opening the door to investment, we can modernise care homes, expand capacity, and create a more-stable, high-quality system that works for everyone: residents, families, care workers, providers, and the public.

A sector ready to do more

The foundations are already in place.

The UK has a vibrant care sector with deep expertise, strong local presence, and committed providers and investors.

In the 12 months since July 2024, the sector attracted a record £4bn in capital – an all-time high, according to Cushman & Wakefield.

HC-One is proud to play a key role in this picture of investment.

By demonstrating our value, and opening the door to investment, we can modernise care homes, expand capacity, and create a more-stable, high-quality system that works for everyone

With the support of our owners, we’ve invested £110m in colleague pay and conditions to bring over 90% of colleagues to ‘Real Living Wage’; £93m to renovate and upgrade our homes; and £18m in digital transformation to combine digital care planning, monitoring, and medicines in a unified platform to enhance how we provide care.

Importantly, these investments have a direct impact on residents – from better continuity of care through lower colleague turnover, with our rates now sector leading to safer, more-comfortable living environments and more-personalised care.

This level of investor confidence should be seized and directed to support the next wave of growth, particularly in areas where care is most needed and publicly-funded residents are underserved.

The role of government

We’ve been working closely with governments to help make care investment more attractive to committed investors by improving funding stability, streamlining regulation, and enabling providers to build and upgrade with confidence.

The Government’s three-year spending review showed a long-term commitment to funding care with £4bn in additional funding by 2028/29, while the first multi-year funding settlement for local government in a decade will give us the ability and confidence to better project and plan.

This level of investor confidence should be seized and directed to support the next wave of growth, particularly in areas where care is most needed and publicly-funded residents are underserved

Coupled with this, the UK Government’s 10-Year Plan for Health moves resources away from hospitals to communities – supporting homes to deliver increasingly-complex care in partnership with the NHS.

The Infrastructure Strategy, too, opens up the potential for public-private partnerships to deliver new health and care construction in areas where demand is most acute.

Demand for care is increasing – and responsible investment, focused on quality and long-term value, can help us meet it in a way that benefits residents and communities.

We want to be ready to meet this growing demand as part of a sector that is sustainable, equitable, and fit for the future of care.

With around 400,000 additional dementia care beds expected to be needed by 2040, there is significant scope to develop homes that are not just modern and efficient, but built around the dignity, wellbeing, and evolving needs of older people.

And this is a moment for partnership: between government, local authorities, investors, and providers.

This government has demonstrated itself to be willing, and able, to unlock much-needed development, drive innovation, and strengthen the sector for the future.

As the Casey Commission looks to reform care and how it is organised, we have an opportunity to design for ambitious, responsible investment.

We don’t have to start from scratch. International examples show how smart policy can create a thriving care market.

In Germany, consistent funding frameworks and transparent pricing structures have encouraged large-scale, high-quality developments. The result is a care system that attracts long-term capital, delivers high standards of care, and continues to grow.

And we can adapt this approach to the UK, applying lessons that work in our context.

Building a stronger future for care

First, we can make it easier for capital to flow into care.

By lowering the cost of capital through mechanisms like long leases, land transfers, or access to government-backed finance, we can encourage new builds and modernisations, especially in areas underserved by current provision.

Secondly, we can provide more-predictable funding.

We don’t have to start from scratch. International examples show how smart policy can create a thriving care market

A fairer, clearer national approach to funding would ensure residents receive the care they need, regardless of where they live or how they’re funded – creating more equity and consistency.

Simple levels of need would give residents and providers greater clarity and encourage long-term planning.

And this could simplify the commissioning process, reduce administration, and help providers and investors alike feel more confident about the future.

Thirdly, we can recognise and reward investment in modern infrastructure.

Care homes that are built or upgraded to today’s high standards of complex and digitally-enabled care should be recognised, because these improvements translate directly into better daily experiences and outcomes for residents.

In Germany, regulated investment cost adjustments have driven sustained renovations, expansions, and improvements to services, while homes delivering publicly-funded care in the UK do not.

A funding model that reflects investment in quality would support new development and ensure residents benefit from better environments and services.

We can also strengthen local partnerships.

Councils know their communities best and are well placed to work with providers to target investment where it will make the greatest impact.

A funding model that reflects investment in quality would support new development and ensure residents benefit from better environments and services

By identifying high-demand areas and offering practical support, whether that’s through planning certainty, land availability, or forward funding, local authorities can play a central role in shaping the next generation of care.

Finally, we can make resident contributions clearer and more consistent.

Many people already pay something toward their care. With a fair, transparent, and strongly-regulated framework in place, we can empower residents to choose homes that suit their needs and preferences while reducing pressure on council budgets.

Where we can be

All of this adds up to a powerful opportunity: to define our sector as a space for innovation, quality, and long-term value.

By improving the investment environment, we can unlock new developments, create rewarding careers in care, and support older people to live well in later life.

This doesn’t require huge new spending or sweeping reform. It simply requires us to remove barriers, send the right signals, and work together to build a more-sustainable system.

Care is one of the most-important sectors in our society, often privately delivering a public good.

This doesn’t require huge new spending or sweeping reform. It simply requires us to remove barriers, send the right signals, and work together to build a more-sustainable system

It touches the lives of millions and underpins the dignity, wellbeing, and independence of people across the country.

The good news is that we know what works. We have a strong provider base, growing investor interest, and clear international models to draw from.

With practical steps and shared ambition, we can turn these strengths into a new chapter of growth and stability.

This is a time for optimism and action.

If we seize the opportunity to enable investment now, we can build a care sector that is modern, resilient, and ready for the future.