Today we learned that Southern Cross, a leading provider of care-home services for the elderly, is to close. The company provided care for over 31,000 residents spread over 700+ care homes in the UK. Southern Cross has folded due to its inability to pay its high rent bill (Wall Street Journal, 11/07/2011). Obviously, these are hugely worrying times for the residents and their families, even as many of the landlords of the homes have promised to continue to provide care services.
Now, I know essentially nothing about care home provision, but the story struck me as a timely warning against David Cameron's obsession with opening up public services to private sector provision. (BBC News, 11th July 2011)
I've never really been one for ideologies and dogma - they strike me as naive and dangerous, whether we're talking about religious beliefs, political parties or even technology wars between Apple and Google. So I instinctively reject the notion that the either the public sector, paid for through taxation, nor the private sector, can provide every service and supply every need for society. Much more than this, however, it is easy to demonstrate that the private, capitalist sector cannot be relied on to provide key services such as health care, education, policing, even postal services.
A publicly listed company has one legal obligation, one imperative - to maximise its shareholder value. (InBrief Legal Advice). It can do this through various means - improve its range so more customers buy its products, or improve customer service to maximise customer spend, or spend money on marketing and publicity to give the impression of success where there may not be any. These are all expensive, hard options. Cheaper options include cutting staff, outsourcing non-key activities, buying from cheaper suppliers in countries with poor child labour laws, or selling off parts of the company to boost share price.
That is the role of a publicly listed corporation. Nothing else. Not quality of care, except inasmuch it may lead to more profits. Not universal service, except inasmuch it may lead to more profits. Not even sustaining its own commercial activities - the case of Whitbread PLC is illustrative: once a major company with brands including hotels, coffee shops, breweries, fast food restaurants and fitness centres, they now own just Costa Coffee, Premier Inn hotels and Brewers Fayre restaurants, and a couple of others (Wikipedia, accessed 11th July 2011). The rest were sold off to pay off debts - and to maximise shareholder value. The company is a shadow of its former self - it once owned Pizza Hut UK and the Stella Artois licence in the UK, hugely successful brands. If such a successful company can shed its businesses, its services, its profit generators so easily, what hope a private sector provider of care for the elderly, or a private sector provider of education, or a private sector provider of postal services?
No commercial company has an obligation to provide any level of service, except to its shareholders. The private sector can always walk away. The public sector cannot, and should not.
If the private sector is to provide primary medical care (GP surgeries and walk-in health clinics), if the private sector is to provide care for our elderly, to teach our children and students, to help people back to work or provide legal support, then there have to be standards imposed. There have to be watchdogs, commissioning bodies, bureaucracies and overseers, government quangos to ensure fairness of provision. And before long we have so many bodies trying to look after these competing commercial operations, you start to wonder quite where the cost savings, the efficiencies, the supposed leanness of the commercial sector is going to come from. (The Guardian, 6th July 2011 - though I can't find the source of these figures; apparently from the Royal College of General Practitioners)
I am assuming that the principle of universal access, of free at the point of delivery service is to be maintained. I fear that is is not, that the Conservative government has no real interest in supporting those worst off, weakest, least able to exercise consumer choice, the poor. After all, did they not bring it upon themselves? If they want a better hospital, let them work harder - assuming, of course, they can find a job. Perhaps in a call centre? (No, outsourced to India.) In a manufacturing job? (In our service-driven economy...) Ah well, every office and hospital needs cleaners. Though we closed the local general hospital (BBC News, 9th March 2011).
Anyway, I've gone off track.
My point is that no commercial company can provide a universal level of service or care because that is not the role of private companies. Their role is to generate profit, and hence boost shareholder value. As the Conservatives try to squeeze every public service into a private sector straightjacket, expect quality of care to vary widely, expect the private sector to pick up the profit-generating, rich parts, leaving an impoverished public sector to struggle to provide any level of service at all. Expect:
- Private care homes to close, leaving thousands of elderly people at risk
- Postal companies to cherry-pick profitable commercial contracts, leaving the vestiges of the Royal Mail to provide the expensive last-mile hand deliveries from postmen, without the income to pay for it
- Faith schools to spring up, at first complying with the curriculum while undermining secular, scientific, urban consensus on global warming, the truth of evolution, of the rights of minorities and homosexuals - before opting out of these altogether
- Private hospitals to provide comfortable, well-equipped private rooms - but only for those with routine operations and medical conditions, leaving the medically obese, those with long-term diabetes, HIV+ patients with complex needs to fall back on the remains of the NHS
All people deserve the same level of care, regardless of their ability to pay. A quality education is a right, not a privilege. And the private sector is fundamentally incapable of providing this, as it runs counter to the profit motive. Some school children do need extra support, and this costs more. Some patients do need expensive drugs or surgery, and this costs more. The remote islands of Scotland do need a reliable postal service, and this costs more. And the only way to ensure that these services are provided without reference to wealth or position or influence is to guarantee a universal service - and only the public, government sector backed by general taxation can provide this.
Update: Steve Bell of The Guardian has an excellent take on this story - the Southern Crucifixion of Public Services.