Liz Hodgkinson

The story of the Southern Cross care home company should make us all think and ponder hard. It's something which should never have happened, never have been allowed to happen. Briefly, somewhere along the lines somebody saw a way of making big bucks from these vulnerable elderly people and the local councils who were responsible for the care of those who could not afford to pay for themselves. Instead of being non-profit, these homes, or their owners at least, began to view both the actual premises and the old people who lived in them as cash cows.
Many of us thought - if indeed we gave it any thought - that local authority care homes were owned by the local authorities. But no, they were privately owned by people who instigated a 'business model' whereby these homes would generate millions of pounds for everybody connected with them. Southern Cross, a relatively small company in 2004, began buying up care homes all over the country and then selling them to landlords who leased them back to Southern Cross. This model meant, or should have meant, that everybody would win. The landlords would keep getting rent rises, the properties themselves would keep increasing in value and the local authorities, who were paying for 80% of the residents, would keep shelling out ever more money to keep these old people in the care homes.

The cynical view here was that old people are living for ever longer, it is a sector which is going to keep growing, so why not take advantage of it?

The business model worked so long as everything went ever upwards. But when things went into reverse, the model was seen as unsustainable. Local authority cuts meant that councils could no longer keep shelling out endless amounts for the old people in their care. This in turn meant that where possible, elderly and frail people were encouraged to stay in their own homes, assisted by carers, which was cheaper. Lack of funds and lack of residents meant that Southern Cross could no longer afford the ever-increasing rents on the properties they had sold to consortia of landlords. Worse, lack of cash meant that many staff were not paid or were paid late and so they walked out or resigned, leaving confused old people without the assistance they should have been receiving.

And so the business model fell down. But care homes should never be subjected to a 'business model' in the first place. Surely anybody with a grain of humanity could see that? The result of this debacle is that the entire care home sector is in free fall. Private equity companies became involved and the whole messy business involved complicated layers of buying, selling and ever-changing ownership that nobody could really understand. All we do know is that some fat cats got very fat indeed before everything started to collapse.

What is wrong with local authorities owning their own care homes, providing their own staff and looking after old people properly? Nobody should ever try to monetise care homes, unless they are private and unashamedly run for profit. The vast majority of Southern Cross residents were paid for by the local authority, meaning that the ultimate payers are us, the taxpayers. We are lining the pockets of the city boys who moved in, seeing a wonderful killing. There should not be such things as shareholders in local authority homes. It is all completely wrong, immoral and despicable.

Now the city boys are trying to say they have the welfare of the elderly, often confused, residents at heart. Yes, they are saying this now that Southern Cross is billions of pounds in debt, share prices have plummeted, and the danger is that the whole edifice will completely collapse leaving 30,000 or more residents stranded. After all, they are only in the care homes anyway because they are beyond home care or are suffering from Alzheimer's and cannot look after themselves, even with daily assistance.