Privatisation push as care home giant collapses

The UK's largest chain of care homes has gone bust, after business decisions left it exposed to economic bad times. Ministers are proposing more privatisation at a difficult moment.

'Let me tell you what change looks like,' said David Cameron this week, launching his vision for a future in which charities or private companies will be allowed to run libraries, children's centres or anything else the public rely on – except the justice system or national security.

'It's about ending the old big government, top down way of running public services… releasing the grip of state control.'

Mr Cameron wants a 'level playing field,' to introduce competition and allow local communities or groups of professionals like teachers or doctors to take over the running of, say, a hospital or library.

It's the latest stage in developing the idea of the Big Society – the Conservative leader says it will bring 'more freedom, more choice and more local control'.

A warm welcome from the CBI, the employers' body, confirmed that the private sector is poised to take advantage of a market for public services.

But not everyone thinks the picture painted by advocates of reform is quite so rosy.

Within the governing Coalition, the Liberal Democrats have been voicing objections – the proposals aired this week have had to be delayed and watered down since their original scheduled launch in February.

The smaller party thinks the Conservatives are in danger of misjudging the public appetite for a public services shake-up. It's only a few weeks since the political argument over NHS reform forced the Prime Minister to backtrack.

And out in the world beyond Westminster shock waves are spreading at news of the break up of the biggest private sector care home provider in the UK, Southern Cross.

The company, which runs 752 care homes, has had to pass ownership to the landlords of most of its properties; because of the way the company was run, it is merely renting the premises where it looks after the sick and elderly. When rents rose and revenues declined, Southern Cross found itself in terminal trouble.

Where the buck stops

If all else fails, and if there is any threat to the wellbeing or security of the residents, it will fall to the taxpayer, via the government, to rescue the situation.

'The state is essential for ensuring continuity,' said Danny Alexander, the Treasury minister. 'What the government will be most focused on is ensuring that there is continuity of provision for the people in the care homes that are affected.'

The Prime Minister's opponents argue that the public will indeed have to ride to the rescue if, like Southern Cross, providers go bust or fail.

But he argues there will be 'no more like it or lump it' for the individuals and families who use the public services, arguing that private sector respect for the customer can boost improvement.

You Decide

  1. Do you want to be treated like a customer or a citizen? What are the differences in the attitude of someone providing a public service or selling a service? Does it matter?
  2. 'In a time of economic stress, politics is about priorities'. What are the right priorities for a government? Which public services would you protect before the others?


  1. Watch David Cameron in the video link and read the support from the CBI and attack from the TUC. Write a balanced news report of about 400 words, including headline. Include the best quotes you can find.
  2. A business project: can you write a plan to take over the running of a public service in your area – a library for example? What resources will you need? How would you drum up support?

Some People Say...

“I don't want my grandparents' carers to be in it for the money.”

What do you think?

Q & A

What exactly is proposed?
Well, partly the vision relies on local communities banding together to buy services or commission charities or companies to do work for them. Individuals will also get personal budgets to spend on care or services.
OK that sounds pretty positive.
The idea is to make services better match local needs. But the downside is the risk of patchy rather than standard provision everywhere, and that there will be as much failure as success.
And Cameron thinks that's OK?
He believes there should be an 'open' market: he has been advised that means letting some experiments go wrong. But the Lib Dems aren't so keen. This set of reforms could still face a lot of obstacles.

Word Watch

The process by which something owned and run by the state is transferred into the hands of private companies. During the 1980s and 1990s, Conservative governments privatised a raft of utilities and services.
In a free market, rival companies or charities bidding for business have to offer attractive deals to the customer. Enthusiasts say this process of competition can drive down prices and drive up standards.

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