The collapsing Southern Cross private home-care chain has huge implications. With 750 care homes it is Britain’s biggest private provider of residential homes, and its demise, which could happen any day now, will expose the brutal logic of profit-driven private services – if it’s not turning in a profit, close it down irrespective of the fate of the service recipients. In this case it’s 31,000 old people, mostly in their 80s and 90s and many with dementia. The bald question arises: where will they go? There simply aren’t the places available to take them in the few remaining homes run by local authorities. This is what happens when Cameron’s policy of parceling out all public services, including the NHS, runs riot. This calamity should enforce the withdrawal of this policy. Will it?
There are three key factors behind this approaching catastrophe. First was the Tory Government policy in the 1990s of incentivising the switch to private providers. In the two decades 1990-2010 (the policy was carried on by New Labour) no less than 110,000 beds were opened in private and voluntary homes and 95,000 closed in local authority homes. The result has been that oday some 90% of residential care provision is not publicly provided and most is for profit. But no provision was ever made (or perhaps even ever contemplated) for when a major provider collapsed or downsized.
Second, driven by very tight financial controls from Whitehall (the legacy of Thatcher’s hostility to local government and determination to screw it into the ground), Councils offered such minimal rates to pay for elderly people in care that small private providers were squeezed out of business. It is generally agreed that even minimum care cannot be provided for less than £480 a week, yet some Councils have insisted that £400 a week is the most that they will offer. So the word in Whitehall has developed that only large-scale providers can ensure the security of long-term care. Now we are seeing that policy being destroyed, with appalling consequences for those thousands of elderly caught up in this ideological quagmire, many of whom will certainly die.
Third, the logic of privatisation is now being played out in this case in its crudest form. Homes for elderly people have been floated on the market in exactly the same way as metal or food commodities, namely what purchases will squeeze out the biggest profits? It could be sub-prime housing via securitisation or vulture funds buying up Third World debt and then extorting the maximum interest rates from some of the poorest countries in the world. In this case Arab oil money bought up Southern Cross and then walked away with huge profits by selling off the freeholds, leaving the residual company insolvent and over 30,000 very old people without a home.
So much for handing over all our public services to ‘any willing provider’.