Friday, 3 June 2011

Are our most vulnerable people really safe in the care of these men?

It is a long way from Ireland's Coolmore Stud to Winterbourne View in Bristol. But the two are linked by a fat trail of cash, writes Ben Chu in the Independent

JP McManus and John Magnier (pictured below), the two Irish investors who turn out to own a stake in the Bristol care home at the centre of this week's abuse scandal, are best known for going to war with the Manchester United manager, Alex Ferguson, over the bloodstock rights to the racehorse, Rock of Gibraltar. It's a safe assumption that the pair, who made their fortunes out of racing, did not invest in the disabled care sector with philanthropy foremost in their minds.

The same is probably true of Stephen Schwarzman, head of the private equity firm Blackstone, which acquired the elderly-care-home provider Southern Cross in 2004. Such is the Blackstone founder's obsession with the bottom line that when Barack Obama mooted increasing the risibly low personal tax rate paid by private equity moguls, Schwarzman compared the suggestion to Hitler's invasion of Poland.

Private equity firms like Blackstone present themselves as managerial wizards, who add value to their companies by finding efficiencies and new revenue streams. But more often than not their skill lies in a combination of financial engineering and ruthless cost-cutting. The financial engineering that took place at Southern Cross under Blackstone's ownership is now suspected of helping to push the company to the brink of bankruptcy – a prospect that leaves its 31,000 elderly residents facing an uncertain future. There will now be an investigation into whether the management in charge of Winterbourne View was reckless. Was cost-cutting one of the reasons staff in Bristol were able to get away with behaving in such an appalling way towards residents for so long? Where was the supervision? Where was the training?

There is a bigger picture here. Research by the Financial Times this week suggests that the standard of care in homes that are run for a profit is, on average, lower than in those which are run by charities and local authorities. That certainly fits with the idea that, in private care home, profits come before people.

In fairness, not all privately owned homes are dens of abuse and neglect. Some provide excellent and compassionate care. And we have seen enough abuse scandals in the NHS over the years to know that public ownership does not always equal compassionate treatment of the vulnerable. None of this should let the official regulators off the hook either. The Coalition, which seems determined to leave the care home inspectors at the Care Quality Commission under-resourced, needs to face up to its responsibilities, too. Council cuts to care their home expenditure budgets do not help either.

But ownership does matter. There needs to be a fit and proper persons test for those who want to make money out of providing services for the vulnerable and elderly. When private investors seek to buy into the care home sector we must ask ourselves a simple question before giving the green light: would we entrust our own grandmother with these people?