The Socialist 25 May 2011
Unite to stop the cuts
PDFs for this issue
Care homes privatisation hits the elderly
31,000 people living in care homes face uncertainty over their future.
Southern Cross Health Care, Britain's biggest care homes operator, announced losses of £311 million for the last half year. It admits to being in a "critical financial position" and is battling to avoid bankruptcy. Southern Cross does not have enough cash to survive beyond 30 June.
Rising rents and falling income have opened up a hole in the company's finances.
When the company was owned by the US private equity group, Blackstone, a rapid expansion plan was financed by selling properties to investment companies and leasing them back on guaranteed, upward only annual rent reviews. Southern Cross pays rent on all their 750 homes amounting to £250 million a year.
As a consequence of the Con-Dem cuts, local authorities are placing fewer people in homes, paying fees of £558 a week. Occupancy rates have been falling.
Already, Southern Cross is closing the Sefton Park Care Home in Lanarkshire in Scotland leaving 35 residents only 12 weeks to find a new home. And a "few tens" more homes are to close that are "not financially viable". But the whole company is not financially viable. What happens when it goes belly up?
Local authorities are drawing up emergency plans to deal with the closure of care homes. The uncertainty means that councils are even less likely to send people to Southern Cross now, compounding the crisis.
There have been half a dozen management shake ups in the last two years but to no avail. In a new wheeze they have appointed a new chairman. Yes, you guessed it, a former merchant banker.
Last year 40 homes faced embargoes by the regulator, several facing enforcement orders over hygiene and safety including doors falling off hinges.
This is just one more of example of the private sector's inability to run public services. The spivs and crooks of private equity firms, property speculators and bankers have no interest in providing good quality care homes. They are only interested in making profit.
Councils must have the resources to provide them, planned and organised in a way that includes the residents, their families and workers in the industry.
In this issue
What we think
Defending the NHS
Socialist Party workplace news
Socialist Party reports and campaigns
Reviews and comments
Socialist Party news and analysis
International socialist news and analysis