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Older people victims of a market failure

The threatened collapse of Southern Cross, Britain’s biggest care home company, is the latest episode in a crisis that leaves up to a million older people without support, or with care that is often of appallingly poor quality.

Southern Cross, which runs homes for 30,000 people, is on the verge of financial collapse as a result of property deals that went belly up as a result of the credit crunch. The company has until tomorrow to persuade its landlords to cut its rents or go under.

The private sector controls 70% of the £14 billion care homes “market” created in the early 1990s, with the remainder shared by local councils, the NHS and not-for-profit housing associations. In all sectors, there are numerous reports of low standards, including abuse of residents, with homes run by poorly-trained, low-paid staff. One investigation suggests that between 2005 and 2009, 667 died of dehydration and nearly 160 of malnutrition.

Inspections have virtually ceased as a result of spending cuts at the Quality Care Commission (QCC). But the latest figures show that the quality of care in one in seven privately run homes in England was rated “poor” or “adequate” compared to one in 11 homes run by non-profit organisations or local authorities.

“Fundamentally, it’s now got to a point of being dangerous [for residents] – and it’s going to get worse,” said one CQC inspector, who spoke to the Financial Times on condition of anonymity. “If I had a relative who needed to go to a care service, I’d be concerned.”

Government spending cuts have intensified a crisis in the sector that was well under way in 2009. The recession led to several companies going under, with a result that provision fell. Since then, councils – which pay the private sector to care for local residents – have reduced spending on adult social services.

This means that those who could be supported in their own homes are either going without or having to pay hugely increased charges. Age UK estimates that out of 2 million older people in England with care-related needs, 800,000 receive no formal support from public or private sector agencies. With spending cuts under way the figure is likely to pass one million between 2012 and 2014, the charity say in a damning new report.

Real spending on older people’s care will be £250 million lower in 2014 than in 2004. Over the same period the number of people over 85 has risen by two-thirds (630,000 people). In 2005 half of councils provided support to people assessed as having “moderate” needs, but in 2011 the figure has fallen to 18%.

As a result the number of people receiving local authority funded care at home has been slashed from 489,000 in 2004 to 299,000 in 2009.

Southern Cross has been the subject of a campaign by the GMB trade union. Paul Kenny, general secretary, said: "These care homes are not factories that are failing from lack of demand but are an essential part of every community and now face ruin due to the combination of privatisation and private equity."

Well, this is not a new story. Kenny and his union colleagues had 13 years of New Labour government to try and end the capitalist market in care which puts profits before the needs of older people. Nothing of the kind happened, of course. Instead, New Labour built on the public-private partnership approach in care as well as the NHS.

Now the spending cuts are adding to a systemic market failure, with older people increasingly the victims of a callous disregard for their wellbeing by the state as well as the private sector. A social system that cannot look after its older people with dignity and real care is both callous and unsustainable and, moreover, beyond reform.

Paul Feldman
Communications editor
31 May 2011

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