Britain’s Care Crisis: How Profiteers Are Crippling Us All

Servicing the needs of the super-rich is exactly what the privatisation of public services is all about. Ordinary people never benefit when public accountability is ceded to private businesses whose primary motivation is to service shareholder profit margins.

Unlike many politicians, The Financial Times — the newspaper written by and for the super-rich — recognises the systemic way in which the privatisation cripples the public good.

Earlier this month, for example, the newspaper warned of the deep problems caused by the privatisation of old people’s care homes. The paper explained how the average weekly cost of residential care had soared from around £700 a week (in 1998) to just over £1,400 (in 2017), with the vast majority of care homes now being run for-profit. The Financial Times then drew attention to the fact that:

“Three of the largest – HC-One, Four Seasons and Care UK — are in the hands of private equity, with hefty debts and labyrinthian group structures, involving scores of subsidiary companies, many of which are listed offshore.

“’What we have is the financialisation of the care home sector, where some of its biggest mangers are operating on the private equity model and expecting returns of 12 or 14 per cent when the downward pressure on revenue and the upward pressure on costs means they can’t possibly make that kind of money,’ says Nick Hood, an adviser at insolvency specialists Opus Restructuring.

“Concerns over the debt-laden structures of these companies first emerged when Southern Cross, then Britain’s biggest care home provider, collapsed in 2011 after it could no longer meet rent payments. Rising costs, a shortage of nurses and cuts to government funding have since left many more homes on the edge.” (“Frailty of Four Seasons shows risk to residents,” Financial Times, December 16/17, 2017)

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Fat-cat private equity bosses therefore feather their bountiful nests at our expense. This is because as “almost half of Britain’s 410,000 residents receive some level of local authority support” we have the ridiculous situation whereby vast sums of public money continue to be syphoned away into private pockets, away from a care system that is already past breaking-point. Human need is thereby dumped in favour of private greed.

A follow-up article titled “Private equity is the wrong prescription for creaking care homes” (Financial Times, December 18, 2017) continued:

“Lost as ever in [the latest] squabble about financial assets are the real lives of those to whom Four Seasons is supplying services. For behind the buckling balance sheet and City bravado are tens of thousands of elderly people. Promised a decent standard of care, they find themselves the victims of austerity-driven economies, such as those experienced by residents of Millbrow Care Homes in Widnes, where inspectors observed ‘unpleasant smells of urine’ and ‘seventeen-hour gaps’ between dinner and breakfast. Formerly run by Four Seasons, Millbrow was recently taken back into local authority control after the group indicated its intention to close the home.”

The article correctly highlights some of the contributing factors undergirding this despicable human vandalism: “Inadequate state funding and weak regulation have contributed to the malaise into which the care home sector has tumbled.” These are political problems that could be easily reversed by a Corbyn-led Labour government that was determined to renationalise all of Britain’s health and social care services. Such a socialist government could then act to prioritise the common good by providing the necessary funding and democratic oversight (regulation) to ensure that our vital public services are no longer run into the ground.

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But many more services that are integral to a promoting a healthy humane society urgently need taking back into public ownership too, including not least the banks and railways. And in a limited way even the Financial Times questions the logic of trusting the market to contribute towards the public good. The newaspaper is clear, noting that “as with other essential services such as water, one can question whether time-limited investment funds, with their emphasis on short-term financial goals, are appropriate owners of these long-term assets – especially at times of turbulence.”

Yet not all political elites – particularly those governing our country – find themselves in agreement with such sensible words of wisdom.

From Southern Cross to Children’s Care

Often failure to meet the healthcare needs of ordinary taxpayers invites the promotion of any guilty individuals, not their punishment. This leads to the dire situation whereby the very same profiteers who oversaw the British care “sectors’ most notorious bankruptcy,” the tragedy at Southern Cross, were actually rewarded by ‘our’ government. Therefore at the same that the Southern Cross debacle was unfolding, Blairite Baroness Morgan — who had served as a Southern Cross board member between 2006 and 2011 – found herelf promoted to regulate the education sector as the new head of Ofsted (2011-2014).

Not content with meddling with elderly care homes and the education of the young, Baroness Morgan is now involved in ‘managing’ the care of the young. Morgan does this by serving as a founding trustee of Frontline – a so-called leadership group which forms part of the government’s ongoing efforts to ‘reform’ (or rather undermine) social care provision.

Given ongoing social concerns about Frontline’s involvement in ongoing attacks on the children’s care sector – like those that have been raised by critics like Professor Roy Jones — it is fitting that the technocrats who run Frontline cut their pro-privatisation teeth in managing the controversial Teach First initiative; and that the origin of Frontline owed to an idea that was “incubated” by the pro-privatisation education charity, ARK. It is for such ideological reasons that Blairites sit comfortably alongside Tories in mangling the social care of the young and vulnerable.

Non-profit leadership is also central to the work of Frontline, with one of their most notable trustees being Andy Elvin, who is the CEO of TACT (The Adolescent and Children’s Trust). Here one might observe that although TACT describes itself as “the UK’s largest fostering and adoption charity and voluntary agency,” its activities are not so dissimilar to those overseen by other well-paid corporate technocrats, and so Elvin appears happy to be in the business of cracking open local authority children’s care services to external competitors. This much was made clear in a report recently produced by the Department of Education which observed:

“A significant move in the direction of [local authority] outsourcing was the appointment of TACT (The Adolescent and Children’s Trust), the UK’s largest fostering and adoption charity and voluntary agency, to run Peterborough City Council’s new permanency service under a 10-year contract. It is the first such arrangement and will commence in April 2017, with the expectation that it will deliver savings of £1 million a year once fully established. It remains to be seen if this will be emulated elsewhere and if the savings are realised.” (“The fostering system in England: Evidence review,” DoE, July 2017.)

Masterminding Privatisation

Another politically power individual who is playing a central role in progressing the ongoing privatisation of children’s care services is Sir Martin Narey, whose earlier lifetime achievements have included overseeing the privatisation of many British prisons. Thus not long after Narey had retired from his role as the Director General of the Prison Service for England and Wales, he unearthed his new vocation as the chief executive of the children’s welfare charity, Barnardo’s (2005-2011).

It is of course no coincidence that shortly after Narey parted company with Barnardo’s, his former employer courted public outrage, when following “the coalition’s ‘abolition’ of child detention in 2010, Barnardo’s announced its participation in the Home Office’s new ‘family-friendly pre-departure accommodation’ to be managed by G4S”. An important study on this development that was undertaken by the Institute of Race Relations concluded that Barnardo’s, in taking on this contract (and its “unquestioning acceptance of the framework of its care provision”), “colludes with, legitimises and provides chintz curtains for a system of institutionalised disbelief, indifference and inhumanity – no matter how kindly it does its job.” (“The fading red line: Barnardo’s role in the detention and removal of children,” IRR, May 15, 2014)

Since leaving Barnardo’s Narey has continued to peddle his own personal wares as a consultant-for-hire to G4S and for the Tories – producing a series of reports advising the government on future options for the ‘reform’ of the children’s care system. Again, Narey’s pro-privatisation agenda shines throughout his work, as is evidenced by recent “independent review of children’s residential care,” “Residential care in England,” which was published in July 2017.

Rather than argue straightforwardly for the privatisation of children’s care, Narey, following the line of Andy Elvin and company, apparently aims to encourage greater voluntary sector involvement in children’s care in order “to offer a competitive challenge to private sector providers.” Narey explains:

“There would certainly be more confidence in the market if providers from the not for profit sector were willing to return to this work in larger numbers… This may not be straightforward. Public awareness of historical abuse scandals may have reduced somewhat, but the memories still scar the large charities such as Barnardo’s, which once dominated this work. The fear of further reputational damage, caused perhaps by the exposure of further abuse, has been enough to deter their return to residential care.”

To undermine the logical and commonly-held belief that private sector providers are making millions at the public expense, Narey pours scorn upon the Howard League, which he says “was particularly critical of Cambian Group, which is currently the largest of the private companies involved in children’s homes.” He then provides a quote from the Howard League that outlined how Cambian, which was founded by and is still owned by a US-based private equity company, has managed to accrue sizable profits from their involvement in the children’s care sector. Narey thus try to refute the Howard League’s dismay at such blantant profiteering by writing:

“It may be that providers are taking what might be considered excessive profits. But, if so, it is hard to understand how their prices remain competitive. If very large profits were being made by a significant proportion of private providers, we should expect their homes to be considerably more expensive than local authority homes. But they’re not. I have seen nothing to contradict the conclusion reached by Price Waterhouse when they looked into this for the then Department of Children Schools and Families in 2006.”

Significantly, earlier this month the Cambian Group featured in a ITV documentary that exposed how private equity groups like Cambian’s owners are able to make tidy profits by charging up to £4,800 a week per child to provide residential care; while simultaneously employing low-paid staff with next to no experience of working with children. So considering that it was Narey’s choice to dwell upon the example of Cambian, it is also intriguing that Cambian’s current Chief Operating Officer, Anne Marie Carrie, had previously led Barnardo’s. In fact it was Carrie herself who took over the leadership of Barnardo’s in the wake of Narey’s retirement.

Narey however believes that private commissioning, like that undertaken by Cambian, is defensible because the evidence (that he cites) illustrates that for-profit care providers charge similar rates as the in-house care that is provided by local authorities. By his reasoning then, private sector providers turn a profit, not because they charge more, but because they “use staff more efficiently”. This efficiency is of course not necessarily a good thing for the staff who provide children’s care, which Narey acknowledges (in passing) when he states:

“Differentials in pay and conditions for staff may certainly explain why private operators are able to make some profit. Their staffing costs are certainly lower. They appear to use staff more efficiently and pay them less generously. Local authority homes, irrespective of their size, have higher staffing averages than privately run homes (15 compared to 11). And local authority staff are paid more, earning an average of £13.28 an hour compared to £9.39 an hour in private sector homes and £10.15 in voluntary sector homes.”

In contrast to Narey’s own dubious recommendations derived from his discussion of these matters, some might say that the facts that he does cite actually help make a water-tight case for avoiding private-sector care provision at all costs. To restate the case in favour of public sector provision of care services: local authority care homes do not suffer from understaffing in the same way that private sector homes do, workers in the public sector get paid more, and, as he notes elsewhere in his report: “Staff in privately run homes tend to work longer hours on average (38.6 hours a week) compared to local authority run homes (33.9 hours a week).” None of this is to mention the fact that within homes run by local authorities, workers benefit from hard-won trade union recognition rights, something that is anathema in most private sector care homes where it can often be considered a sackable offence to be outspoken in defence of workers’ rights.

What is apparently to anyone with even a passing interesting in the public good is that private sector providers have no place in Britain’s care system, education system, nor health system!

There is plenty of money in Britain to properly fund any public service that any government sees fit to create or improve. The major problem that therefore faces the public is that corporate profiteers, with the help of their many political friends, would prefer to avoid contributing towards the public good in any way shape or form — whether that be by paying their employees a real living wage, or by even paying tax.

That is why we need a political solution to a political problem. We need an end to the Tories, a resurrection of a fighting trade union movement, and a Labour government (devoid of Blairites) that is led by elected representatives who are will commit to fighting tooth and nail for working-class interests.

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